WALL 
POINT 



VIEW 






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THE 
WALL STREET 



POINT OF VIEW 



BY 



HENRY CLEWS 

AUTHOR OF " TWENTY-EIGHT YEARS IN WALL STREET 







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SILVER, BURDETT AND COMPANY 

NEW YORK BOSTON CHICAGO 






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Libra 



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ongress 

Two Copies Received 
SEP 1 J 900 

Co «'>gM entry 

FIRST COPY. 

2nd Copy Delivered to 

ORDER DIVISION 






Copyright, 1900, 
By SILVER, BURDETT AND COMPANY. 



• • • 



CONTENTS. 

PART I. 

WALL STREET ITSELF. 

CHAPTER I. 

PAGE 

Wall Street as a Gauge of Business Prosperity i 

What it is : its area, population, and institutions. — The differ- 
ence between natural and artificial conditions, the latter being 
the false standard of judgment by outsiders. — People decry 
Wall Street speculation without a correct knowledge of its char- 
acter. — " The Street " is not a gambler's paradise, but a place 
where hard, honest work tells. — It is a public benefactor, and 
once, at least, saved the country, — The center to which the 
surplus money of the world flows for investment. — This famous 
street has the life-blood of railroads, upon which millions of 
people have been enjoying a better living than they could get 
elsewhere. 

CHAPTER II. 

The Study of the Stock Market 5 

The powers of speculative fascination over a large number of 
people. — Bad results of adopting second-hand opinions. — The 
laws of speculation and investment must be studied profoundly. 
— Fact and rumor should be carefully distinguished. — Hard 
study of facts and real values generally leads to sound and accu- 
rate conclusions. — It is also necessary to study the circum- 
stances and events which cause real values to fluctuate. — How 
natural laws eventually regulate values and reduce inflated ones 
to their true basis. 

CHAPTER III. 

Money and Usury 11 

Various opinions regarding interest and usury. — Why should 
not compensation for the use of money be left to the freedom of 

iii 



iv CONTENTS. 



PAGE 



contract untrammeled by restrictive laws ? — Views of Lord 
Bacon and Lord Mansfield on usury and interest. — The word 
" interest " not known in Bacon's time. — All laws against usury 
capable of evasion. — Various rates and the laws of usury per- 
taining to different states. — Freedom of contract the true doc- 
trine in money-lending and borrowing. 

CHAPTER IV. 

The Railroad Problem 18 

Present status of railroads, and indispensable reforms in their 
management. — Legislative requirements. — Railroad business 
as a gauge of prosperity. — Ten millions of people depending 
on them for a living. — Suggestions upon consolidation. — Hints 
for the regulation of directors. — President Ingalls's views on 
the evils of railroad management. 

CHAPTER V. 

Management of our Industrial Enterprises .... 26 
The relation of the financial management of these institutions 
to their success or failure. — They should be compelled to make 
periodical statements of their condition as quasi-public concerns. 
— The origin of corporations and their beneficent purposes. — 
They are powerful in the present day, if properly managed, for 
the production of wealth and the promotion of the best interests 
of society. — A public and periodical system recommended for 
the examination of accounts by experts trained for the pur- 
pose. — Under proper management, the whole community 
might share in the great advantages which these industrials are 
capable of conferring on the public at large. 

CHAPTER VI. 

Concerning Trusts and Corporations 31 

Trusts are transformed into corporations and doing business 
legally. — How corporations with large aggregations of capital 
make everything cheaper for consumers and purchasers gen- 
erally. — Amazing decline in prices and railroad rates, while 



CONTENTS. V 

PAGE 

wages are higher than ever and the number of employes in- 
creased. — The power of consolidations and corporations for 
increasing wealth, national and private, and for making every- 
body more prosperous. — Interesting confession of F. B. 
Thurber, the ci-devant anti-monopolist. — He gives cogent 
reasons for his change of heart, and shows the great benefits 
corporations confer upon the people. — Farmers and cotton- 
growers more prosperous than ever, and why. — Cooperation 
the coming power in the competitive struggle, which will also 
solve the problem of socialism. — Enough of remedial legisla- 
tion already provided to give relief in almost any supposable 
case. 

CHAPTER VII. 

The Art of making and saving Money 44 

Opportunities for making money numerous. — How to em- 
brace them, and how to begin the work of accumulation. — It is 
easier to make than to save money. — The small beginnings of 
prominent millionaires, and how they made their fortunes. — 
Industry, perseverance, honesty, and thrift must be associated 
with the methods of all who aspire to success in life. — Necessity 
has been the great stimulus in the eminent examples here cited. 
— Prudence, forethought, and sage advice required for successful 
investment. — Begin right, early in life. 

CHAPTER VIII. 

Business Education 50 

How the business prospects of young men of the present 
day compare with those of twenty-five or fifty years ago. — A 
much better start in life possible now than then, as proved by 
historical facts. — The young man of to-day as compared with 
his grandfather at the same age. — How millionaires of old were 
made, and how young men now want to become millionaires 
by jumping over the intermediary steps and omitting the hard 
work. — Certain delusions about business success criticised, and 
some cordial advice vouchsafed. — Opinions old and new on 
college and classical education, and the value thereof in a busi- 
ness career. — Macaulay's views. 



vi CONTENTS. 

CHAPTER IX. 

False Men and Methods on the Street 59 

Modern and ancient opinion on this subject compared. — 
How it manifests itself in Wall Street affairs. — The inherent 
capacity to resist the evil tendency. — Fortunes that are made 
by degenerates and regenerates contrasted. 

CHAPTER X. 

Panics and their Indications .66 

The causes which generally give origin to panics described. — 
How these great upheavals in business and finance may be par- 
tially avoided, and their consequences alleviated when they do 
occur. — Greater elasticity in the methods of banking required to 
enable the banks to meet emergencies. — These institutions have 
in recent years done well when not handicapped bylaw. — They 
should be permitted to make more liberal use of their reserve to 
relieve financial distress. — How banks and business men should 
cooperate in times of impending crisis. — The forecast of the 
panic of 1893. 

PART II. 

WALL STREET AND THE GOVERNMENT. 

CHAPTER XL 

Washington Domination in Finance, Speculation, and -Business 74 
Some inquiry into its nature. — Assumes the complexion of a 
centralizing bureau of financial information with a censorship 
attachment. — The attempt of the political power to override 
the financial a failure. — All financial roads lead to Wall Street. 
— New York destined to be the world's center of finance. — 
Politics cannot rule finance except on a very broad basis. — 
Some sapient object lessons from the Constitution in their appli- 
cation to statesmanship, politics, and finance. — Justice Story's 
opinions of the duties of a President in giving information and 
counsel to Congress. — The immense power of the President in 
these matters, and the requisite qualifications to enable him to 
advise. — His great and varied responsibility. — The " duty of a 
President" is more than "executive." — A nice distinction be- 



CONTENTS. vii 

PAGE 

tween advice and the power of initiating measures in Congress. 

— The object lesson for the people in the Washington domination, 
and its issue. 

CHAPTER XII. 

The Chief Magistrate * 81 

Qualifications indispensable for the highest office in the land. 

— Neither a towering genius nor an offensive partisan fit for the 
position. — The ultimate and crucial test of the popularity of a 
President, and his consequent success, is the material prosperity 
of the country. — He has to bear the brunt of bad times, no mat- 
ter how able and good he may be. — Failure of Webster, Clay, 
and Calhoun to reach the goal of their ambition. — The nation 
sensitive on a President's errors in finance and currency. — Parallel 
between Jackson and Cleveland. — Origin of the national bank- 
ing system. 

CHAPTER XIII. 

The Cleveland Administration — First Term .... 92 

An excellent beginning with the best intentions. — Large 
promises, but small performances. — Purposes regarding Civil 
Service Reform. — The theory was Jeffersonian, but the condi- 
tion was Jacksonian. — The famous "Tariff Message" of Mr. 
Cleveland. — "A condition, not a theory." — How the purchase 
of a yard of calico confounds his theory and pet arguments in 
favor of free trade. — Mr. Cleveland's free-trade principles 
would bestow our home markets on foreign manufacturers and 
reduce our own workmen to indigence. 

CHAPTER XIV. 

The Harrison Administration 98 

Its influence on some of the consequences of the Baring 
panic. — The absence of "Jingoism" was a conspicuous feature 
of the Harrison regime. — Harrison as an orator. — His Western 
trip compared with the Eastern trip of Bryan. — His astonishing 
familiarity with all the States and their conditions, arid his 
magnetic power over audiences, as displayed in Western cities. 

— A thorough politician and a far-seeing statesman. — His co- 
operation with James G. Blaine in devising the wise policy of 
reciprocity which was spoiled by the Democrats. 



viii CONTENTS. 



CHAPTER XV. 

PAGE 

Mr. Cleveland's Second Administration 103 

How Mr. Cleveland acquired the character of an independent 
candidate. — Success of his fiscal policy, especially regarding 
the surplus revenue and the depository banks. — Making himself 
" solid " with bankers and financiers. — How it was that he was 
beaten by Harrison in 1888, but vanquished him in 1892. — 
How he lost his popularity by the irreparable errors of the two 
object lessons. — Remarks on his sound money views and his 
indomitable perseverance. — Utterly failed to understand the 
tariff question. 



CHAPTER XVI. 

Ex-President Cleveland Personally considered . . .114 

The theory of his potent personality, and an attempt to un- 
ravel the secret of his success through this mysterious power 
and other potentialities. — Striking a balance between his praise- 
worthy acts and some of his mistakes. — How he is likely to be 
rated by the future historian and biographer. — His name 
stamped indelibly on the politics of his own times. — His un- 
flinching advocacy of sound money. — He drew men of all 
shades of politics after him and was independent of party. — 
Why he drew so many heterogeneous elements. — Comparison 
with Macaulay's " Machiavelli." — His prompt and popular 
action in suppressing the Chicago riots and causing the over- 
throw of Eugene V. Debs. — His advice to the Democratic 
party. 

CHAPTER XVII. 

Significance of the Wilson Tariff Law 123 

Intended to wipe out every vestige of Republican tariff legis- 
lation. — How the law has proved a boomerang, and deprived 
the Democrats of a return to power for a long period. — How 
men accustomed only to little places and little interests cannot 
be expected to deal with big matters. 



CONTExNTS. ix 



CHAPTER XVIII. 

PAGE 

A Batch of Legacies 128 

Devised and bequeathed to the Democratic party by the last 
will and testament of the last Democratic Congress. — The un- 
finished business of eight years of hard and anxious work in the 
White House. — Lincoln's views on the Constitution and the 
tariff. 

CHAPTER XIX. 

Tariff for Prosperity only 132 

The invaders of our home markets repulsed. — Foreign manu- 
facturers and the products of their pauper labor not in demand. 
— Definitions of revenue tariff and protective tariff. — The latter 
fairly provided for in the Dingley Bill, and wool restored to the 
farmers. — Home markets in preference to foreign. — How 
McKinley humorously caught the clothier member for Boston 
on the cheap clothing argument. — Home capital and home 
labor will get a chance for development, and the time of pros- 
perity has come. — Practical outcome of the protection and free- 
trade doctrines considered. —The testimony on this subject of 
two eminent witnesses, James Buchanan and Grover Cleveland. 

CHAPTER XX. 

Our Foreign Trade and Free Trade 146 

The immense showing of our foreign trade for the fiscal year 
ending June 30, 1898. — Our balance of trade far ahead of that 
of other years and twice the amount of any previous record. — 
This has been achieved under a protective tariff which free- 
traders thought was going to ruin the country. — Flow it tallies 
with the free-trade doctrine of the Cobden Club and that of its 
representatives in this country. — The immense increase in the 
exports of our manufactured goods. — Our wealth increases as 
our imports diminish, and as our exports increase. — We saved 
in 1898 an amount of money greater by half a billion of dollars 
than the national debt at the close of the Civil War by the 
much maligned protective tariff. — The greatest profitable import 
to us was gold, of which we had a balance of $105,000,000 for 
the year. 



X CONTENTS. 

CHAPTER XXI. 

PAGE 

Retrospects and Prospects 155 

Certain comments and predictions about free-trade legislation 
and an answer to charges of pessimism. — Analysis of past legis- 
lation in its practical outcome, and the prospective hopes of the 
operation of the measures now gone into effect. 

CHAPTER XXII. 
The Trans-Missouri Case 160 

A ruinous decision of the Supreme Court of the United States. 
— Destructive influence on values and a blow to general busi- 
ness. — A pool law wanted that will ensure railroad and business 
prosperity. 

CHAPTER XXIII. 

The Laws relating to Trusts, Corporations, and Railroads 169 

A better administration of these laws needed. — Safeguards 
of corporations, and a comparison of ours with those of foreign 
countries. — The railroad situation and the Supreme Court deci- 
sion. — Views on the subject. — The pooling question and busi- 
ness interests. — A new law to regulate railroad rates and to 
define a violation of railroad law indispensable. 

CHAPTER XXIV. 

Currency Legislation 179 

Beneficent effect of the New Currency Law. — Our improved 
credit shown by our new two per cent, bonds at a premium. — 
Gold now our unequivocal standard of value. — Baneful effects 
of previous uncertainty as to our standard. — Advantage to trade 
and to money-movement of the extension of national banks. — 
Good effect of the gold enactment on the value of American 
securities abroad. — The surprising and dazzling era of business 
prosperity into which the world is entering. 

CHAPTER XXV. 

Prophetic Views on Silver 184 

A review of the subject prior to the great presidential cam- 
paign which resulted in the maintenance of the gold standard. 



CONTENTS. xi 

PAGE 

— Bryan's great coup at the Chicago convention, which he 
carried by the power of plagiarism from the old play of " Jack 
Cade." — The deadly parallel of the two comedians. — A decent 
respect for old plays to be encouraged. — The theory of an 
international agreement discussed, and the theory of national 
free coinage of silver shown to be erroneous and fraught with 
national danger. — The effect upon international trade would be 
disastrous. — A plan proposed for an international currency 
that would greatly facilitate business operations in all channels 
of trade and commerce and vastly aid the progress of prosperity 
in this country. — What is left of the silver issue to-day. 

CHAPTER XXVI. 

President McKinley's Policy and the Nation's Future . 194 

A resume of the policy of the present administration as out- 
lined in the inaugural address of the President speaking for 
himself and his party. — The keynote of his policy is, first, 
sufficient revenue to run the government. — Afterward a com- 
mission on the currency question. — The wisdom of McKinley's 
policy in putting revenue and tariff reform before the currency. 

— Revision, not revolution, of the tariff. — The government to 
remain in the banking business, but the currency to be taken 
out of politics and remodeled without reducing the volume. — 
Industrial interests and the rights of labor to be guarded against 
foreign invasion. 

PART III. 

WALL STREET AND SOCIAL PROBLEMS. 
CHAPTER XXVII. 

The Masses and the Classes 206 

No room for jealousy where political equality, by virtue of the 
Declaration of Independence and of the Constitution, exists. — - 
Sectional hostilities and class animosities should net be fostered 
but suppressed. — Erroneous logic of those who want to get rich 
quickly. — The evil influence of communism and socialism on 
the body politic. — Geographical discriminations to be repudi- 



xii CONTENTS. 

PAGE 

ated. — George Washington's opinion on the subject. — The 
question of the distribution of wealth and its rapid progress in 
the distribution of large fortunes. — If monopolies rule, whose 
fault is it ? — Accumulation of capital in the hands of a few, and 
how the socialistic remedy would work. — Advice to those who 
want to get rich rapidly. — Victims of soaring ambition. — How 
the Gould and Vanderbilt estates are distributed effectually 
without the aid of the socialists. 

CHAPTER XXVIII. 
A Question of Good Citizenship 215 

How do wealthy men compare with others as good citizens? 

— Conditions that antagonize good citizenship. — The character 
and influence of the money hoarder and the absentee analyzed. 

— Decline in the rate of interest and of faith in the security of 
property one of the most important questions of the day. 

CHAPTER XXIX. 

Labor Unions and Arbitration 222 

Even if there should be nothing to arbitrate, the arbitration 
will satisfy public opinion. — Strikes should be a last resort only 
against unbearable grievances. — How arbitration works in 
Stock Exchange affairs. — The public are victims of the quarrels 
which they are innocent of provoking. — Cooperation the true 
method of escaping the despotism of " bosses " and improving 
the condition of labor. 

CHAPTER XXX. 

The Physical Force Annihilators 227 

Several species of this genus, including socialists, nihilists 
anarchists, and communists. — A retrospect of their plans and 
purposes for the regeneration of mankind and the reconstruction 
of society, after going through a few preliminaries, such as the 
suppression of rulers and the extinction of capitalists. — Accord- 
ing to the programme the scheme will imply wholesale assassi- 
nations and universal plunder to begin with. — After purposes 
indefinite. — A problem for the socialistic reformers as prelimi- 
nary to success 



CONTENTS. xiii 

CHAPTER XXXI. 

PAGE 

The Annihilators* Methods 234 

For the regeneration of society. — A closer examination of the 
remedies which the various destructive fraternities entitled to 
this common appellation propose for the inequalities complained 
of, and how they would work in practice. — Where will they 
get the men to help them to demolish the thrones and break up 
present political organizations ? — They could put down the 
present tyranny only by establishing a greater. — Failure of all 
previous attempts to establish communities. — Our ballot-box 
and existing laws are ample to maintain the strictest equality, 
to remedy all wrongs and redress all grievances. 



PART IV. 

WALL STREET AND INTERNATIONAL AFFAIRS. 

CHAPTER XXXII. 

Peace and Prosperity 245 

Some reflections on the horrors of war. — How it ruins mate- 
rial prosperity and degrades humanity. — Remarks on the efforts 
of the six European powers to put Europe on a peace footing. 
— The favorable influence which the success of the movement 
would exercise on trade and commerce. — Plans for an Anglo- 
American reunion discussed. — Captain Mahan's views. — A 
defensive alliance of all civilized nations against a possible 
invasion of barbarians. 

CHAPTER XXXIII. 
The Baring Failure 252 

The true story of the cause of that astounding collapse told 
for the first time. — The great Baring boom, and what the 
scaling down of the interest on British consols had to do with 
it. — The Duke of Marlborough's hand in it. — Sensational acts 
of the hypnotic gentleman who captivated the Argentine beauty, 
and through her captured all the Barings' business in the South 
American Republic. — Magnificent executive ability displayed 



xiv CONTENTS. 

PAGE 

by Mr. Lidderdale in the rehabilitation of the firm. — Amazing 
gratitude of the benevolent friend who assisted Lord Revel- 
stoke with the five million dollars. — The future money center 
of the world. 

CHAPTER XXXIV. 

The Venezuela Message Panic 261 

This panic one of the most far-reaching and most disastrous 
in its consequences. — It was a surprise, and hence its great 
power for mischief, especially at a time when prosperity was 
just under way. — An utter collapse of credit, both foreign and 
domestic, aggravated by foreign holders returning our securities. 

— The Monroe Doctrine, and how President Cleveland con- 
strued it. — Simply an outburst of honest but overweening 
patriotism on his part. — His misapprehensions regarding the 
nature of so-called international law, and what constitutes a 
casus belli. — The President's just cause for offense at Salisbury's 
hauteur, but the Monroe Doctrine not applicable to the case. 

— How the message and its consequences played into the 
hands of the free- silver faction and helped to make the candi- 
dacy of Bryan possible. 

CHAPTER XXXV. 

Our Nation's Credit . . . 272 

Why should not this credit, as illustrated in the market value 
of our bonds, be on as high a plane as the credit of other 
nations? A plea for the Sherman Silver Law, and how it was 
instrumental in tiding the financial world over the Baring panic. 

— A brief retrospect of bond issues and cognate subjects of 
national interest. 

CHAPTER XXXVI. 

Our Nation's New Departure 276 

The influence of our recent victories on the minds and pur- 
poses of other nations. — Significance of the Czar's note on 
disarmament. — Was our war with Spain justifiable? — The part 
played by the President and Congress in the war. — The prob- 
lem of our new possessions. — What shall we do with them? 



THIS BOOK 

Eg IkgpectMlg Engcrtbeli 

TO THOSE 

ABLE STATESMEN, POLITICIANS, FINANCIERS, 
AND MEN OF AFFAIRS, 

TO WHOSE CONSTANT GUIDANCE IS DUE THE ADVANCEMENT OF 
OUR COUNTRY ALONG EVER-WIDENING PATHS OF 

PEACE AND PROSPERITY 



THE WALL STREET POINT OF VIEW. 



Part I. 

WALL STREET ITSELF. 



CHAPTER I. 

WALL STREET AS A GAUGE OF BUSINESS PROSPERITY. 

What it is : its area, population, and institutions. — The difference between 
natural and artificial conditions, the latter being the false standard of 
judgment by outsiders. — People decry Wall Street speculation without 
a correct knowledge of its character. — The Street is not a gambler's 
paradise, but a place where hard, honest w T ork tells. — It is a public 
benefactor and once, at least, saved the country. — The center to which 
the surplus money of the world flows for investment. 

THE district known as Wall Street embraces more wealth 
in proportion to area than any other space of similar 
dimensions in the world. Considering even the mere thorough- 
fare known by that name and extending from Trinity Church 
to the East River, the same assertion holds good. This latter 
limit is the one mentally placed by the great majority of our 
people upon the financial heart of the country, that throbs with 
the daily ebb and flow of millions, infusing life into all our vast 
enterprises. 

The Wall Street region includes in its wealthy grasp the large 
majority of New York banks and other financial institutions, 
including savings banks. It is the great center of the insurance 
companies, life, fire, and marine ; of the great Trust Companies 
which command thousands of millions of capital, and are the 
custodians of many of the largest and most wealthy estates in 
the country. Finally, the region known as Wall Street has 
virtually a contingent population of three millions, which is just 



2 THE WALL STREET POINT OF VIEW. 

about the census record of the thirteen original states when 
they cut loose from Great Britain and asserted their independ- 
ence. In addition to the financial institutions as above stated, 
Wall Street has banks with large capital connected with all 
foreign nations. China, no less that the comparatively con- 
tiguous London, is represented by banking institutions here. 

It has been the habit of too many people — well-meaning 
people, too — to decry Wall Street as hurtful to the morals of 
the country and injurious to our best business interests, — all 
of which is mistaken. Wall Street has been very aptly de- 
scribed as the " business pulse of the nation," and that is what 
it is, in the truest sense of the term. As the mercury in the 
thermometer denotes the degrees of heat and cold, so do the 
fluctuations in the Wall Street markets show the rise and fall of 
the business activity of the country. Let there be any activity 
in mercantile or manufacturing circles, and it is immediately 
reflected in the Stock Exchange and the other exchanges where 
values are dependent upon business activity and financial confi- 
dence. On the other hand, causes that influence the outside 
world unfavorably have a depressing effect in Wall Street, and 
the prices of securities and products take a lower turn. These 
are the results when natural conditions are allowed to prevail. 
Of course there are times when speculative syndicates get con- 
trol, and by their manipulations create artificial conditions and 
artificial results. Then it is that panics are liable to occur; in 
fact, I doubt if there has ever been a panic in Wall Street that 
was not due to the work of such manipulations. Wall Street 
is a place where the laws of cause and effect are conspicuously 
potent, and it is as impossible for any combination of men to 
resist these laws without making trouble as it is for a human 
being to defy the forces of nature. An irreverent operator in 
grain speculations, commenting once on the failure of a pool 
to put up the price of wheat and maintain it in the face of a 
big crop, said, "It is of no use trying to buck against God 
Almighty ; he can upset the bulls every time." 

To the student of affairs there is more suggestive truth ex- 
pressed in these few terse words of a disappointed speculator 



WALL STREET A GAUGE OF PROSPERITY. 3 

than in whole columns of the tirades preached against Wall 
Street's ways by those ministers who have only a superficial 
idea of the subject they are talking about. Wall Street is 
not a gambler's paradise. There is no place in the business 
world where more hard work, closer calculation, keener insight 
into affairs, and philosophical and conservative conclusions are 
required than in the offices of its bankers and brokers ; there 
is no class of men who watch events more closely than the 
operators in its markets. In the stress of war times it has 
been to Wall Street that the government turned for help. It 
was from Wall Street that the assistance once came which 
made a continuance of the government even a possibility, and 
it has always been ready to respond to any call, when finan- 
cial or business problems were to be met and solved. It is 
very true that men have taken a gambling advantage of oppor- 
tunities afforded by this great market, but these are not the 
men who have made it reflective of the business prosperity, 
not only of this country but of other countries, — a place 
where surplus money from all over the world flows for invest- 
ment in the securities of the corporations which are dependent 
upon the material development of the United States of Amer- 
ica — the greatest land under God's sunlight. No, we cannot 
do without Wall Street. 

How would our one hundred and eighty thousand miles of 
railroads have been constructed without Wall Street? These 
great pioneers of development, prosperity, and civilization would 
have remained exceedingly limited in their extent and scope if 
the bonds to build them had not been negotiated by Wall Street 
financiers. Think of the fertile lands that have thus been 
thrown open to millions from all nations of the globe, and the 
enormous increase of wealth that has followed this opening of 
vast national resources. Then again, look at the army of well- 
paid employes connected with the railroads themselves, who, 
together with those who work in the interdependent trades, — 
railroad building, car building, and railroad supplies of every de- 
scription, — amount to nearly two millions. While it is unfortu- 
nately true, as I have pointed out in my book, " Twenty-eight 



4 THE WALL STREET POINT OF VIEW. 

Years in Wall Street," and in other publications, that disrepu- 
table railroad projectors and managers have, especially through 
the medium of construction companies, made railroads the 
means to their dishonest ends ; yet in spite of such abuses this 
vast railroad system, advanced and supported by Wall Street 
capital, has been the chief instrument for a national increase 
which has no historic parallel. 

Not only is Wall Street indispensable to this country, but 
foreign nations also are feeling the benefit of its operations 
more and more every year. The London Stock Exchange 
and the Paris and Berlin Bourses would suffer if the New York 
Stock Exchange were to be closed for a week or even for a 
day ; the progress of great industries dependent on them 
would languish just as surely as our own railroad, telegraph, 
and other enterprises would suffer in the failure of the great 
financial fountain from which they draw their invigorating 
tonic. Enterprise everywhere would be depressed as if seized 
by a sort of financial paralysis. What folly is this enmity 
toward Wall Street ! Let us condemn and cut off its evil, 
parasitic growths, but let us recognize and glory in the fact that 
this great financial center is fast approaching the point at which 
it is destined to become the enormous clearing house of the 
world's enterprises and industries. In the course of evolution 
and a higher civilization we might be able to get along com- 
fortably without Congress, but without Wall Street, never. 



CHAPTER II. 

THE STUDY OF THE STOCK MARKET. 

The power of speculative fascination over a large number of people. — 
Bad results of adopting second-hand opinions. —The laws of specula- 
tion and investment must be studied profoundly. — Fact and rumor 
should be carefully distinguished. — Hard study of facts and realities 
generally leads to sound and accurate conclusions. — It is also necessary 
to study the circumstances and events which cause real values to fluc- 
tuate. — How natural laws eventually regulate values and reduce inflated 
ones to their true basis. 

ANYTHING that is worth doing is worth doing well. In 
order to do anything well, one must study the subject 
thoroughly, not necessarily in books, because books are, except as 
to the laying down of principles, rather unsatisfactory teachers. 

The stock market is a most fruitful and fascinating field of 
study. It attracts more influential and well-to-do men than 
any other arena of activity in American life, and of course a 
great deal of study is bestowed upon it. The reasons why the 
results of so much study are not always commensurate with the 
labor and time employed are numerous. Some of them are 
substantially as follows : — 

People have preconceived notions. They are not willing to 
clear their minds of existing theories and bring themselves down 
to close dealing with facts. They are apt to base their conclu- 
sions on the opinions of others. Now, opinions as to the value 
of anything are sure to differ, and opinions as to future values 
differ still more widely, just as the spokes of a wheel are wider 
apart as you travel away from the hub. When you reach out 
into the future, you are getting away from the hub of the pres- 
ent. People are usually unwilling to act on conclusions that 
conflict with their desires, and that involve the acceptance 
of immediate losses. They resemble the wounded man who 

5 



6 THE WALL STREET POINT OF VIEW. 

refuses to let the surgeon cut off his leg when he is told that 
amputation will probably save his life. They are apt to study 
in a superficial manner, without thoroughness, using scraps and 
smatterings of knowledge when even the most exact information 
is hardly sufficient. 

Other reasons could be adduced, but they might be need- 
less. A certain king excused the municipality of a town that 
neglected to fire a salute in his honor on their giving him the 
first one of fifty good reasons, — that they had no powder. 
The other forty-nine were suffered to remain undivulged. 
Enough reasons have been given here to explain why so many 
people fail to study the stock market successfully. 

But while it is very easy to pick to pieces the various systems 
that are sure to win on the stock exchange, and to criticise the 
methods of study of the prejudiced, it is most difficult to lay 
down absolute rules for the successful study of the share mar- 
ket. One invariable rule there is, but it requires large capital 
and patience to practise it. It is this : Buy only what you can 
pay for; buy when cheap and sell when dear. The veriest 
financial infants can see the force of this. 

Yet even this precept has its weak points. For instance, 
how is a person to be absolutely certain that a given stock is 
cheap or dear at a given time ? You say, by comparison ? But 
if he compares the price with what it was at any past period, he 
must also be able to state all the facts that existed at that 
period having any bearing on this stock, and since these facts 
may run into the thousands as to number, and into all parts of 
the country as to place, our learner has a heavy contract on 
hand. Then, too, he must bring to bear a clear judgment, 
and a resolution such as soldiers exercise when they charge 
batteries, and he must be prepared next day to find out that 
he was wrong. After a careful and exhaustive search into all 
the materials at hand, he buys shares at, say, 60 per cent, of 
par, as being cheap at the price, and really worth more money, 
and next day they may be offered at 50. He then has really 
lost |ioon each share; but if he holds the purchase, and it 
ultimately advances to par, he has gained $40 per share. 



THE STUDY OF THE STOCK MARKET. 7 

And suppose he sells on any given day at par, and a week 
after that the shares sell at no, he then loses $10 per share. 
So that this " safe " road to success has its stumbling blocks as 
well as others, although they are not' so dangerous. In such a 
road there are no deadly pitfalls. The men who travel it are 
not tempted to defalcations and suicides. 

Horace Greeley once said that the way to resume specie pay- 
ments was to resume ; and it might also be said that the way 
to study the stock market is to study it. One distinguished 
and generally successful stock, operator of the period is credited 
with being in daily receipt of numerous pieces of information 
from various parts of the country as to the condition of crops, 
weather, freights, passenger traffic, in short, all facts that go to 
make up the status of railroad enterprises. These private bits 
of information are not open to the general public — they cost 
too much, and call for too much machinery ; but the bureaus 
of public information are continually sending out intelligence, 
and it is mostly trustworthy. This class of facts must be dis- 
tinguished from mere rumors. 

Rumor is, as a rule, uncertain and untrustworthy. It has 
been compared to an animated thing that begins its career by 
being small and compact, but as it stalks along it becomes 
larger and less definite as to form, until at last it is like a mon- 
strous cloud that has neither shape nor consistency, and finally 
disappears, no one knows how or where. But to study facts 
leads to generally accurate conclusions ; and accurate conclu- 
sions are apt to lead to wise transactions. 

Thus, the fact of large harvests in the year 1891 in the 
United States, coupled with the fact of poor harvests in Europe 
in the same year, led to the conclusion that our grain would 
be in demand for foreign shipment, and that the earnings of 
our railroads would be increased. The conclusions were sound 
and the earnings were increased, and judicious students of the 
market bought stocks for a rise. Then the fact that stocks rose 
and kept on rising, coupled with the fact that the general 
public were buyers, and with the additional fact that the public 
prefer to be buyers and to buy at high prices, and not to buy 



8 THE WALL STREET POINT OF VIEW. 

at all unless prices are high, led these same judicious students 
to sell the same stocks during the prevalence of high prices, — 
both the stocks which they owned and large amounts which 
they did not own. Again, the study of facts led to wise con- 
clusions, and these ended in successful results. Both as bulls 
and as bears the wise students have fared well. The careless and 
superficial public, coming in too late as bulls, found themselves 
at last compelled to become unwilling sellers at greater or 
less losses, in some cases so severe as to shatter households 
and drive citizens to ruin. 

Thus the person who studies real values must not be content 
with that alone. He must also study the facts that in times 
of stress and storm make real values fluctuate as wildly in 
manner, if not in amount, as those of the most fanciful secu- 
rities, and he must learn that no operation on margin is really 
safe unless the margin is large beyond the ordinary run, and 
is backed by equally large reserves. Some financial teachers 
lay it down that your risks should not exceed 25 per cent, 
of your capital. This is excessive prudence \ but the man who 
keeps half a mile away from the edge of a cliff will never fall 
from it. One who has studied the share market carefully has 
eventually found that if he is able to pay one half the market 
price of his holdings, he need have little fear as to the other 
half; that is, on judicious selections of properties. 

No mention is made here of shares that sell in December 
at 72 and in March at 30. Whoever buys such goods should 
pay for them and put them away, and let them incubate with 
such patience as is attributed to the hopeful setting hen. 

The student of the stock market has at certain periods no 
easy task before him. Imports are sometimes large, and ex- 
ports small. We sell to foreigners a million per week of cotton, 
and buy from them two millions per week of coffee, the cotton 
yielding us a small profit, the coffee yielding foreigners an 
immense profit. Other nations at times do not seem to prefer 
our grains to those of Russia and the East, despite those foreign 
markets of bewildering extent and good prices which exist, I 
fear, only in the imagination of free-traders. Then, too, the 



THE STUDY OF THE STOCK MARKET. 9 

indebtedness of corporations and individuals acts as a constant 
menace to the natural tendency of loose capital to be lent out 
to useful enterprises. 

Yet, at the bottom of all this turbulent mass of facts there 
are natural laws at work which, if we study them in relation 
to the objects which they control, will be found to be as sure 
in their operation as sunrise. The collapse of the iniquitous 
coal combination, as cruel as one to raise the price of water or 
air, was the result of natural law, and the same laws are busy 
to-day, and the facts are always with us. It is the business 
of the diligent to find them and to profit thereby. 

Next to the unwisdom of selecting and following bad or in- 
competent advisers in matters of speculation and investment, 
there are also certain persons whom, if you wish to do well and 
make a fortune honestly, you should be careful to avoid. You 
will not always know them by their appearance ; in fact, that is 
often the worst rule to go by, for they are generally well dis- 
guised. It is in their walk, talk, and conversation that you will 
find them out, and, that this be the easier, I have made a col- 
lection of their characteristics, as follows : — 
Avoid a man 

Who vilifies his benefactor ; 

Who unjustly accuses others of bad deeds ; 

Who never has a good word for anybody ; 

Who is always prating about his own virtues ; 

Who, when he drinks, habitually drinks alone ; 

Who boasts of the superiority of his family ; 

Who talks religion down-town in connection with his daily 
business affairs \ 

Who talks recklessly against the virtue of respectable 
women \ 

Who runs in debt with no apparent intention of paying ; 

Who borrows small sums on his note or check dated ahead ; 

Who won't work for an honest living ; 

Who looks down upon those who do ; 

W T ho imputes bad motives to those trying to do good ; 

Who betrays confidence ; 






10 THE WALL STREET POINT OF VIEW. 

Who lies ; 

Who is honest only for policy's sake ; 

Who deceives his wife and boasts of it to others ; 

Who chews tobacco in a public conveyance ; 

Who gets intoxicated in public places ; 

Who partakes of hospitality and talks behind his entertain- 
er's back ; 

Who borrows money from a friend and then blackguards 

the lender. 

With a population of 80,000,000 people, which this country 

now has, it is easy to find associates in life without selecting 

men possessed of any of these characteristics, and life is the 

better worth living without them. 

You will both save and make money by strict observance of 
this short catalogue of avoidances. You are not called upon to 
do anything or to risk any money in the exercise of this discre- 
tion. It simply consists in letting such people severely alone, 
and if you have been in the habit of being imposed upon by 
such characters, you will find your happiness as well as your 
treasury greatly increased by prudently avoiding them. 



CHAPTER III. 

MONEY AND USURY. 

Various opinions regarding interest and usury. — Why should not com- 
pensation for the use of money be left to the freedom of contract 
untrammeled by restrictive laws? — Views of Lord Bacon and Lord 
Mansfield on usury and interest. — The word " interest " not known in 
Bacon's time. — All laws against usury capable of evasion. — Various 
rates and the laws of usury pertaining to different states. — Freedom 
of contract the true doctrine in money-lending and borrowing. 

" TV /TONEY and Usury " is a subject that has perhaps been 
1VX more extensively discussed than any other within the 
sphere of trade and finance, and usury has been the fertile 
theme of a great amount of both sense and nonsense, as well as 
of a large number of foolish laws. 

In times gone by the word " usury " was employed in the 
same sense as " interest " is now, and Lord Bacon, in his essay 
on usury, evidently attaches this signification to it, as he makes 
a distinction between high and low " rates of usury," and the 
context shows he was unacquainted with the term " interest." 
He criticises pretty severely the critics on usury, and says : 
" Many have made witty invectives against usury. They say 
that it is a pity the devil should have God's part, which is the 
tithe, that the usurer is the great Sabbath-breaker because his 
plough goeth every Sunday." 

So we see from Bacon's opinion that the prejudice against 
paying for the use of other people's money is as old as it is 
unreasonable. 

We have no record of any period when within the confines of 
civilization men were not in the habit of paying for the use of 
the property of other men ; in fact, such compensation marks 
the dawn of civilization — a time when it was discovered to be 

ii 



12 THE WALL STREET POINT OF VIEW. 

better to hire another man's goods or lands than to kill him for 
the sake of becoming their owner. An equivalent for the use 
of lands or buildings we style rent; for the use of chattels, 
hire ; for the use of money, interest. One of the most notice- 
able facts about the last-named equivalent is that in almost all 
communities its amount, as related to the material for the use 
of which it is paid, has been made the subject of legislation. 
Laws have never been enacted regulating the prices of rents or 
of the hire of chattels, but statutes regulating the interest of 
money are beyond computation as to number, and their exist- 
ence dates back to epochs beyond which public record and the 
memory of mankind run not to the contrary. 

Since this is an undeniable fact, there must be a reason for 
its origin and its persistent vitality. May not this be the reason ? 
— that money not being a commodity, but the representative 
of all commodities, capable of passing through all metamor- 
phoses of lands, houses, cattle, grain — ■ in short, of all transfer- 
able things whatsoever — may be said to have a value free from 
such changes as other commodities are constantly undergoing ; 
therefore, while the owner of these may lawfully demand any 
price he pleases for the use of such property, and take all he 
can get, the owner of money must not demand or take more 
than a certain price, which price shall be stated by the law- 
makers of the community. This is the probable basis of usury 
laws, though we should not assert that laws are enacted solely 
in order to assert a principle. As a matter of fact, they are 
kept on the statute books in deference to a sentiment which is 
supposed to pervade the public mind, that poor people must 
be protected from the rapacity of money-lenders. 

It will not be difficult to show that the alleged principle on 
which usury laws are based is illogical ; and further, that, as a 
matter of fact, these laws do not prevent poor borrowers, or 
borrowers upon hazardous pledges, from paying high prices for 
the use of money. That money is not a commodity because 
it is the representative and summary and equivalent of all 
commodities, is a conclusion which is not only open to doubt, 
but may be with reason flatly denied. That the greater includes 



MONEY AND USURY. 



13 



the less is an axiom ; and if money includes all commodities, it 
must itself be the greatest of commodities. It is the nearest 
approach to an unchangeable measure of values that can be 
attained, but at the same time it remains a commodity, subject, 
as are other commodities, to the laws of supply and demand. 
In the varying conditions of trade, its use may at one time 
command interest, or usury, at a rate of but three per cent, per 
annum, while at another it may command six per cent, or 
more. These terms indicate the altered relation in its supply 
and demand, consequent upon the variations in production or 
consumption of other commodities. There is, indeed, no abso- 
lute measure of value except it be the general average resulting 
in society from the continually varying relations which com- 
modities bear to each other in respect of prices. To-day a 
bushel of No. 1 winter wheat shall be exchangeable for a barrel 
of crude petroleum, or ten yards of sheeting, or one gold 
dollar; to-morrow it shall be exchangeable for two barrels of 
crude petroleum, or fifteen yards of sheeting, or one gold dollar 
and a half. But we must have terms in which these fluctua- 
tions may be expressed, which shall form an understandable 
basis of exchange of products between individuals and among 
nations ; hence the elaboration of this means of facilitating 
commerce into vast monetary systems. 

Money is not only an admitted equivalent for all commodities, 
but is itself a commodity and the greatest of commodities in this 
respect — that it is the most strongly desired, the most widely 
known, and the most universally possessed. As civilization has 
progressed, so has the necessity developed for such an equivalent 
in the most concentrated form, and one capable of easy trans- 
mission. Along with the social evolution of the most enlightened 
nations, has come, by successive steps, the adoption of the most 
precious available metal, gold, as the basis of this equivalent, 
and the most compact exchangeable representative commodity. 

Some writers have asserted that money is not a commodity, 
because it is neither produced nor consumed. The objec- 
tion to this statement is that it is not true. Money is both 
produced and consumed. It is first dug out of the earth, 



14 THE WALL STREET POINT OF VIEW. 

and afterward it undergoes a constant consumption by abrasion. 
It is estimated that the production of gold keeps but slightly 
in advance of its consumption year by year, while in the last 
twenty years the production of silver has been much in excess 
of the consumption. Therefore the relations of gold and silver 
have changed. Gold is dearer and silver is cheaper. This one 
fact shows that the precious metals used as money by the com- 
mon consent of mankind are, in truth, commodities. Is it 
logical that the greater, the representative commodity should, 
in its operations, be bound by restrictive laws which have never 
been sought to be applied to the lesser commodities? 

It would seem, therefore, that no reason worth the name 
exists why a person having money which he is able to spare to 
the uses of others, should not receive from them such compen- 
sation for its use as he and they may by contract agree upon. 
And all reasons urged against usury will be found to be either 
wholly sentimental or based upon misconceptions of the true 
functions of money. 

History has already passed upon Napoleon's Berlin decrees, 
and his other laws against the use of, and traffic in, English 
merchandise ; the witchcraft laws of New England have died ; 
Quakers are no longer persecuted in Massachusetts and Con- 
necticut ; Great Britain has abolished all usury statutes ; Con- 
necticut has done the same, as well as many of her sister 
States ; they never have disfigured the statute books of Califor- 
nia; but in New York, the greatest of the States, the most 
commercial, the richest, the State where the fullest play should 
be given to the traffic in useful commodities, it is a crime to 
lend money on time at seven per cent, per annum ! 

Laws that regulate the rate of interest in cases where no 
contract is made, or on sums that have become overdue, are 
natural and reasonable ; but no legislation can be seriously 
defended that attempts to prohibit one citizen from making 
any contract with another, touching useful commodities or ser- 
vices, which both agree to ; still less where it brands one of the 
contracting parties with guilt and enables the other party to 
rob him with impunity, and even to procure his incarceration. 



MONEY AND USURY. 1 5 

If we are wrong in this way of thinking, we prefer to be wrong 
in company with the enlightened sense of Great Britain, Con- 
necticut, and California — to mention no others — rather than 
to be right in company with the antiquated sense of New York. 

As to the many devices used to nullify these statutory tram- 
mels laid upon the freedom of man's dealings with man, Lord 
Mansfield, one of the great English judges of the eighteenth 
century, in delivering an opinion on usury, said : " Where the 
real truth is a loan of money, the wit of man cannot find a shift 
to take it out of the statute." Lord Mansfield, in his patriotic 
admiration of the English law which he, in common with Black- 
stone and some others, considered the " perfection of human 
reason/' was doubtless sincere in the expression of this opinion, 
but there are very few judges in the present day who do not 
know that there never has been an usury law passed which 
human ingenuity has not found a method of evading. Many 
instances of such evasions and of a great variety of methods of 
evasion can be easily cited from the standard law books and 
reports, even from Lord Mansfield's day down to the present 
time. 

Bacon, with his love for systematizing every subject which 
he handled, divided the arguments that prevailed in his time 
against and for usury, or interest, and states them as follows in 
his quaint but terse English. He says : "The discommodities 
of usury are, first, that it makes fewer merchants, for were it 
not for this lazy trade of usury, money would not lie still, but 
would in great part be employed upon merchandizing, which 
is the vena porta of wealth in a state ; the second, that it makes 
poor merchants, for as a farmer cannot husband his ground so 
well if he sit at a great rent, so the merchant cannot drive his 
trade so well if he sit at a great usury." 

It would seem that the borrowing of money at a high rate in 
our times works, as a rule, the very contrary to what many peo- 
ple in Bacon's day had estimated as the results. A man seldom 
borrows money at a high rate, or at any rate, now, without a 
fair prospect of investing it so as to have a profit after paying 
the interest. So the merchant never " sits at great usury," to 



l6 THE WALL STREET POINT OF VIEW. 

use Bacon's words, unless he sees the means of paying the usury 
and realizing a surplus besides. Another reason assigned in 
the catalogue of Bacon's "discommodities" is "that usury doth 
dull and damp all industries, improvements, and new inven- 
tions, wherein money would be stirring if it were not for this 
slug." 

This is a peculiar view of the results of borrowing. Conse- 
quences seem to be largely the contrary in our day. This power 
to borrow infuses activity into all the channels of industry and 
invention in which money is employed. Many of the project- 
ors of our modern " sky-scrapers," for instance, can usually 
realize three or four per cent, profit between the money bor- 
rowed and that expended on the buildings. Of course it 
changes the nature of the transaction if the interest is larger 
than the profits of the business, but there are very few so 
foolish as to borrow under such conditions and at such ruinous 
rates. 

Viewing the obverse side of the picture, however, Bacon's 
theories are more in consonance with present commercial prac- 
tice and experience. But they all go to show, more or less, 
how narrow the basis of business, trade, and commerce was in 
the golden age of Queen Elizabeth and James the First, about 
three centuries ago, and they bring out in bolder relief the great 
progress that has been made since that time. 

Bacon goes on to show that were it not for borrowing, 
" men's necessities would draw upon them a most sudden un- 
doing; " and he concludes that " it is a vanity to conceive that 
there would be ordinary borrowing without profit, and it is im- 
possible to conceive the number of inconveniences that would 
ensue if borrowing be cramped. Therefore, to speak of the 
abolishing of usury is idle. All states have ever had it, in one 
kind or rate or other ; so that opinion must be sent to Utopia." 

Such were the opinions of the great philosopher who has 
gained the credit of creating a revolution in scientific thought 
and who was chiefly instrumental in reducing the philosophic 
theories of centuries to the practical basis which has been at the 
bottom of all modern invention and discovery. " The key to 



MONEY AND USURY. 1 7 

the Baconian system of philosophy," says a great writer, " was 
utility and progress," and these have brought into being a world 
of business enterprise, and need for freedom in its transaction, 
not dreamed of in his time. The day is not far distant, I 
believe, when money will be bought and sold and rented out 
with as little restriction upon the parties to the contract as that 
pertaining to any other commodity. 



CHAPTER IV. 

THE RAILROAD PROBLEM. 

Present status of railroads, and indispensable reforms in their management. 

— Legislative requirements. — Railroad business as a gauge of pros- 
perity. — Ten millions of people depending on them for a living. — 
Suggestions upon consolidation. — Hints for the regulation of directors. 

— President Ingalls's views on the evils of railroad management. 

THE present status of railroads and the reforms necessary 
in their management, together with the legislation requi- 
site to help to bring about these reforms, constitute one of 
the subjects of most extensive interest in this country at the 
present day. When railroads are prosperous, the whole country 
is prosperous, and not less than a seventh part of the popula- 
tion of the country is depending almost directly on them 
for a living. Therefore if such a calamity could be sup- 
posed as would bring the railroads to a standstill, not less 
than ten millions of people out of the seventy would be almost 
immediately brought face to face with all the horrors of famine. 

Certain Western legislators never seem to think of this when 
they are doing their best to drive the railroads in their various 
localities out of business or into bankruptcy, nor does it ever 
seem to occur to these Solons that they themselves would be 
among the greatest sufferers by the strict execution of the laws 
which they are annually striving to promulgate. 

One of the first things that Congress should deal with, and 
that without delay, as regards the railroad problem, is the en- 
actment of a pooling bill that will allow freedom of contract 
between and among railroad corporations. If there were a 
well-defined and liberal national law to this effect, then the State 
legislatures would be powerless to shackle commerce, for the 
Constitution of the United States makes full provision against 

18 



THE RAILROAD PROBLEM. 19 

such interference in Article I., section 10, clause 1, which says: 
" No state shall make any law impairing the obligation of con- 
tracts." This clause in the Constitution would squelch all the 
vicious attempts of the anarchistic railroad- wrecking legislators 
throughout the entire West, or wherever the spirit of populism 
might desire to destroy property and rob the owners thereof of 
their just rights. 

The loose and somewhat hostile laws of Congress, and their 
still more hostile interpretation by the Supreme Court, in one 
instance at least, have hitherto stood in the way of the applica- 
tion of this clause in the Constitution against mischievous State 
legislation in the matter of railroad corporations. Hence the 
necessity of a national law to make effective this constitutional 
provision which the Fathers in their wisdom inserted in the 
supreme law of the land, in the interest of personal freedom, 
and to conserve the rights of private property. 

The question of railroad consolidation is one that is largely 
occupying the minds of railroad managers, and those who have 
large interests in railroad securities. One railroad magnate of 
great experience in building railroads and saddling most of the 
expenses on the government, thinks that it would be a good 
thing if consolidation were carried so far as to concentrate the 
whole railroad property of the country in the hands of not more 
than three corporations. What a tremendous number of rotten 
organizations this one would contain, — probably enough to 
wreck them all ! In such an arrangement many wealthy and 
well-to-do stockholders would in all probability be reduced to 
poverty, and ultimately the three big concerns might have to 
go into the hands of receivers, thus throwing the great aggre- 
gate system into bankruptcy. 

Consolidation cannot fail to be beneficial where connecting 
roads extend on parallel lines, and all are naturally working 
toward the same end ; namely, the transportation of freight and 
passengers from one prominent and opulent town to another. 
Particularly is this the case where some rich valley or system of 
valleys indicates the course of travel and commerce between 
these points ; and for an illustration we may take the New York 



20 THE WALL STREET POINT OF VIEW. 

Central, which is the most brilliant instance of successful rail- 
way consolidation known in the United States. 

At the time when this arrangement was effected, the plan of 
introducing branch roads from comparatively thinly settled and 
barren districts had not been exploited to any noticeable extent, 
nor has this particular road favored such a plan. Its acquisi- 
tion of the ill-starred West Shore Road was a necessity ; it was 
consummated with reluctance, and only because the directors 
believed that the destinies of our imperial State would eventu- 
ally grow in opulence sufficiently to make the transaction pro- 
ductive. It was legitimate because it "had to be," and there 
is no danger of such another enterprise. The topographical 
formation of the State is such that no competing trunk road 
can be laid between Albany and Buffalo, and no capital or 
charter could be procured to construct a fourth line between 
New York City and Albany. Both sides of the Hudson River 
are now occupied, and the Harlem road is sufficient for the 
rich and level counties that extend between the eastern bank 
of the Hudson and New England. The system, therefore, is, 
humanly speaking, complete ; and, although on its central and 
westward divisions it may yet absorb laterals, its comparative 
permanency and necessary conservatism tend to give it the 
confidence of investors, and to make it as it has been termed, 
" the c consol ' of the market." 

It strengthens our position that while this great process of 
consolidation took place, attended by a continual increase of 
market value of shares, two other roads —one partly, the other 
wholly in the same State — which attempted absorptions equal 
in magnitude, but wanting in the elements of prudence and 
rationality, experienced such depressions of share values as seri- 
ously to disturb the money market and ruin thousands of small 
holders. The stock of one of these great roads sank to 30J in 
1877; that of the other to 25^. Both have since recovered 
to above par, but the operation has been slow and painful, and 
during a period of years their stocks were footballs and specu- 
lative traps, the tools of gamblers, instead of the useful servants 
of the community, and the secure refuges of finance. 



THE RAILROAD PROBLEM. 21 

When we go westward and look at the outcome of consolida- 
tion, we find different conditions and less prosperous results. 
The real logic of the case has been neglected or contemptuously 
thrust aside, and steps have been taken which no arguments 
could justify. The directors of the main lines in these cases 
have proceeded not in the direction of the interests of their 
stockholders, but in that of bargains and deals with the officers 
of unprofitable connecting and lateral roads on the principle 
of spoliation and a division of the spoils. 

These transactions have been numerous and of enormous 
magnitude, but they have been all pretty much alike, so that 
when we describe one we describe all. Given, a useful, well- 
constructed dividend-paying road ; a body of people with some 
capital and political influence aided by some of the directors 
of this prosperous line ; these construct a branch road to some 
outside point, — the more important such point the better, but 
that is of small consequence. The road gets itself built, it is 
bonded for more than it cost, and it cost twice as much as it 
ought, since the constructors were all together in the ring and 
favored one another. Then the capital stock is fixed at so 
much, and this is mostly distributed among the constructors. 
Trie road then, swelled to a fictitious price of three or four to 
one, and not worth much to start with, is ripe for absorption 
and consolidation. Its directors and those of the main line 
meet, confer, and vote the measure through. They all profit 
by it, more or less, but their profits are enormously in excess of 
the trifling losses due to the shrinkage of values of the shares 
of the main line. A director of the main line may perhaps lose 
$20,000 on a thousand shares, but what is that when compared 
to a gain of hundreds of thousands in his holdings of the branch 
road whose liabilities are assumed by his victimized corporation? 
Such a director would not be equal to the demands of his 
covetousness if he had not sold thousands of shares short, in 
anticipation of the fall which the transactions of himself and 
his associates were inevitably bound to produce. 

This is not a fanciful picture. On any railroad map the 
expert in railway affairs can trace out such main lines, each 



22 THE WALL STREET POINT OF VIEW. 

with its connecting branches or suckers, many of them worthless 
and many others worse than worthless, which lose themselves 
at the further end in hypothetical towns and barren wilder- 
nesses, and are all grouped together under the specious names 
of former profitable and well-managed railroads. A road may 
have been originally the A. & B. and have paid full dividends, 
so full that it may have been advisable to double the volume 
of stock in order to keep the price of shares at something like 
par, but not too much above it. Even when thus watered it 
has been excellent property, safe for investors, desirable col- 
lateral for bank loans, creditable to its managers, and useful to 
the public. To-day it masquerades under the name of A. & 
B., or perhaps A. B. & C, but it is not either, because it is so 
much more. It has swallowed so many indigestible morsels 
of useless and unprofitable branches that all the letters of the 
alphabet would be required to particularize them ; it has guar- 
anteed all their bonds, and has exchanged its own scrip for 
theirs, so that its own share of capital is in excess of value to 
that extent that it represents only the phantom equity that 
trails along at the heels of a fourth or fifth mortgage. The 
shares that were once a firm property at par are tossed about 
the market at all prices from 70 to 20 ; dividends are scaled 
down from 7 per cent, to 4, then 2, then passed temporarily, 
then passed indefinitely ; a floating debt of unknown amount is 
created; its paper — known as "railroad paper" — is to be 
found by the ream in the portfolios of note brokers ; and when 
it fails to get itself sold at 6 or 8 per cent, it lets itself out at 10 
or 12. Capitalists and banks are invited to make bids on pri- 
vate terms. Every banker knows that railroad paper is fre- 
quently negotiated at 18 per cent., and although the proceeds 
ostensibly go to bona-fide holders for value, no one doubts that 
the treasury of the road that makes such ruinous discount of 
future earnings is the real borrower. Then come income 
bonds, " subordinated and unsubordinated," debenture bonds, 
all the delusive schemes on which bankrupt concerns float along, 
until receivers are appointed and honest management is en- 
forced. The court imposes an assessment, and it is announced 



THE RAILROAD PROBLEM. 23 

as a great success that the A. B. & C. is now earning fixed 

charges ! 

Such is consolidation run mad, and such is its tendency when 
not restrained by natural causes or by honesty on the part of 
managers. Can we expect any other results ? 

And speaking of honesty on the part of managers brings me 
to another important part of the subject under consideration. 
That is the necessity of a protective system of committees, 
chosen by the stockholders of every railroad, to investigate the 
management, have its accounts audited periodically by trust- 
worthy experts upon a plan that would exclude the possibility 
of collusion, and have the reports of these committees reported 
to a central association, also chosen by said stockholders, at 
reasonable intervals. This would in time reform and thor- 
oughly eradicate most of the evils now complained of, and 
make the railroads still more potent instruments for developing 
material prosperity through our unlimited resources. 

In a discourse by M. E. Ingalls, President of the " Big Four," 
C.C.C. & St. Louis Railway, delivered at Purdue University, 
Indiana, many of the evils of railroad management, and the 
needed reforms, are set forth in a very succinct manner, and 
exhibit the thorough grasp that Mr. Ingalls has taken of the 
subject. After adverting to the immense increase and power 
of these properties, and showing what they have done for the 
nation in affording greater facilities for travel, decreasing freight 
rates on the average to four fifths of a cent per ton per mile, 
and on the great products such as wheat, corn, cotton, iron, and 
coal to half this rate, he goes on to show that after the panic of 
1857, stocks of many of the railroads that had formerly been 
paying dividends went down to 10, and in some instances 5 
cents on the dollar. He then describes the advent and 
methods of the promoter who obtained charters, issued stocks 
and bonds on prospective roads, and how the holders of these 
presumable securities felt when the day of reckoning came and 
they were unable to meet the interest. It was in this state of 
affairs that Western hostility was engendered toward promoters 
and contractors and railroad managers in general, and thus the 



24 THE WALL STREET POINT OF VIEW. 

Granger movement of the seventies had its origin. After it had 
spent its force, Congress passed the Interstate Commerce Law 
in 1886, making the difficulties even greater than did the State 
laws. By this law, pooling or the division of business in certain 
equitable proportions was prohibited ; while it is the judgment 
of railroad managers that in no other way than by such divisions 
can permanent and fair rates be obtained. One effect of the 
law is that the big shippers can evade it and undersell the small 
shippers, driving them out of business ; and the same rule 
holds with communities, — the building up of Chicago, for 
instance, and the breaking down of places like Lafayette. 

Mr. Ingalls advises that it is necessary to build five thousand 
miles a year in short and inexpensive lines, as feeders to the 
main systems. He concludes that in a few years we will re- 
quire two hundred and fifty thousand miles of main lines to 
accommodate one hundred million population, which will be 
an increase of 40 per cent, over the present mileage. But we 
require new legislation of a fairly liberal character to achieve 
this end. 

One point in Mr. Ingalls's recommendations is worthy of 
special note ; that is, the issue of debenture bonds on the Eng- 
lish plan instead of mortgages. This would put a stop to the 
immense reorganizations which during the past few years have 
involved one fifth of the whole railroad property of the coun- 
try, and would prevent the stockholders from being wiped out 
in times of trouble. There is no foreclosure in England. When 
the company defaults on the interest of the debentures, a re- 
ceiver is appointed to take care of the profits, but the stock- 
holders retain their interest in the property. 

It is easy to see, therefore, that if we should adopt the Eng- 
lish system, the occupation of our numerous railroad wreckers 
would be gone ; and if they should turn their attention to the 
calling of the highwayman, it would involve a considerable 
enlargement of our prison accommodation. In their new 
occupation they could hardly count on the immunity that is 
now extended to them by the custom which has been in vogue 
for forty years, gaining strength and power all the time. 



THE RAILROAD PROBLEM. 2$ 

I am glad to find that the plan of extension which I have 
been advocating in the newspapers and periodicals for years in 
preference to that of consolidation, is commended by Mr. 
Ingalls. The operation of consolidating down to two or three 
corporations, or probably one, as Mr. Huntington recommends 
(in the belief perhaps that the Pacific roads should be the 
nucleus of the one), would in all probability result in govern- 
ment ownership. This would suppress competition, deteriorate 
values, rob many thousands of stockholders of a portion of their 
property, and destroy the chief stimulus for railroad extension 
and railroad enterprise, thus throwing a wet blanket on every 
kind of business connected with railroad traffic, — and what 
business is not so connected? In fact, it would probably 
create one of the worst panics we have ever experienced ; and 
finally it would greatly embarrass the government itself, which 
would not be able to make railroad revenues and expenses 
balance. Then would come the oppression of extra taxation, 
either in the shape of an addition to the internal revenue 
already swelled to unreasonable proportions, or perhaps an 
income tax. 

There would be no end to the trouble caused by the govern- 
ment ownership of railroads. But there is no chance for such 
a consummation in this generation. 



CHAPTER V. 

MANAGEMENT OF OUR INDUSTRIAL ENTERPRISES. 

The relation of the financial management of these institutions to their 
success or failure. — They should be compelled to make periodical state- 
ments of their condition as quasi-public concerns. — The origin of cor- 
porations and their beneficent purposes. — They are powerful in the 
present day, if properly, managed, for the production of wealth and the 
promotion of the best interests of society. — A public and periodical 
system recommended for the examination of accounts by experts trained 
for the purpose. — Under proper management, the whole community 
might share in the great advantages which these industrials are capable 
of conferring on the public at large. 

IN considering the great subject of industrial enterprises, the 
first thing that naturally strikes the prudent man of general 
business, is the character of the financial management of these 
institutions. 

Usually, the management is most faulty in its failure to 
make periodical statements of their condition, and the favored 
few in the inner confidence of the managers have advantages 
in the general market to which they are not justly entitled. 

The fact that industrials are possessed of double attributes, 
of public and private nature combined, opens the way to abuse 
of official power, which may frequently happen with an honest 
purpose but with an intense desire to assert private indepen- 
dence against what may be regarded as public intermeddling 
with private affairs. An inability to perceive fine distinctions 
between two sets of obligations of this dual character and the 
natural tendency in human nature to follow the selfish purpose 
in the first instance, may lead to official delinquency toward 
the public interests, where the original intention was only a 
matter of self-assertion or a sensitive desire to stand upon 
personal dignity and personal rights. But after such a habit 

26 



MANAGEMENT OF INDUSTRIAL ENTERPRISES. 27 

of action has been some time indulged, it may assume a grosser 
aspect in which delicacy of feeling and lofty notions of self- 
respect play but little part, the change in the man's nature or 
the management's nature and principles having been wrought 
through an appeal to his avaricious propensities, and so blunt- 
ing his perceptions that he becomes incapable of drawing a fine 
distinction between meum et tuum. 

Unfortunately, it is such a spirit that pervades the manage- 
ment of many of these industrials, in consequence of which 
they have been viciously deflected from their true intent and 
purpose. This deflection has occurred through ignorance of 
the end in view, or in forgetfulness that to aim at the greatest 
good is often the best means of attaining one's own individual 
benefit. In truth, avarice is seldom capable of adopting any 
broad view, and this vice is one of the worst influences with 
which the industrials have had to contend, and there seems 
to be but One power that can prevent its invading both public 
and private rights. I have no contention with those who hold 
the doctrine of moral suasion in cases of this kind \ I am con- 
sidering the practical phase of the subject, and I fear that 
nothing but the strong arm of the law will be found satisfac- 
torily effective. Of course the moral sense is an important 
factor to cultivate in maintaining the laws of society and 
business equity, but where this quality becomes atrophied, as 
in many cases of industrial management, the ends of justice 
require firmer measures of reform. 

In plain terms, it is utterly useless to preach the moral law 
to a man who has an idea that he is doing an able and meri- 
torious act in laying schemes to plunder his neighbor in a way 
that the latter cannot detect or expose because the methods 
adopted are such as the public have been taught to think con- 
sistent with good business methods. Nor will the doctrine of 
passive submission help that neighbor to secure his rights. It 
will only render him more liable to be victimized. 

The corporation idea when applied to industrial enterprises 
was, and is, calculated to confer the greatest benefits on hu- 
manity that human ingenuity and energy can bestow. Rightly 



28 THE WALL STREET POINT OF VIEW. 

applied, it is the most effective instrument for moving the forces 
that produce wealth and happiness ; and there is no happiness 
in poverty nor morality in destitution, no matter what theorists 
may say. The existence of the corporation is absolutely nec- 
essary in this age of progress and development, to give inven- 
tions a chance of exhibiting their capacity and of conferring 
their illimitable boons and blessings upon mankind. It enables 
an aggregate of individuals to put their capital and energy 
together so as to act as one gigantic individual and to over- 
come obstacles that can be put aside by no other means. It is 
the practical faith in our day and generation that removes 
mountains. 

But still this naturally benevolent giant is not infrequently 
possessed by the vile demon of avarice to which I have just 
referred, and the problem is how to exorcise the demon. Our 
legislative machinery should, in my opinion, be equal to this 
task. The periodic examinations of the financial management 
of all industrial enterprises can readily be made effective to cut 
off the opportunity for plunder. I admit that this treatment is 
suggestive of very radical measures ; but " desperate cases re- 
quire desperate remedies " is a medical adage quite applicable 
to business maladies. 

Now comes the most delicate part of my task. There is no 
use in firing bullets in the air and losing ammunition upon 
game that is beyond our range. We must give cases in point, 
rather than generalities ; we must point out the very concerns 
in which the faulty secretiveness exists, and without beating 
about the bush. A few of the most conspicuous of these are 
briefly termed in the everyday language of the stock exchange : 
" Tobacco," " Leather," "Whiskey," " Ice," and "Sugar." 

If these, and others similar to them, had been subjected to 
the ordeal of a thorough investigation by expert accountants, 
and their true financial condition laid before the public, an 
innumerable number of serious losses would have been pre- 
vented from falling upon innocent and worthy people, nor 
would the enterprises in question have been exposed to the 
reproach now cast upon them by victims and others. 



MANAGEMENT OF INDUSTRIAL ENTERPRISES. 29 

Some people draw a distinction between dishonest and 
unwise methods in the financial management of such prop- 
erties, and many methods are indeed unwise without being at 
all dishonest or criminal. Ultimately, however, they wreck 
the property just the same as in the cases of Cordage, 
Whiskey, and of numerous railroads, a mere catalogue of 
which would extend this chapter far beyond the limits of its 
allotment. 

There are also many in the railroad list furnishing illustra- 
tions of similarly faulty financial methods. Some of these have 
exhibited peculiar methods, if not delinquencies, in bookkeep- 
ing, which should have undergone more rigid investigation than 
they have received \ and the guilty parties should have been 
held responsible for their acts, which brought about the finan- 
cial downfall of so many great railway corporations in the 
memorable panic of 1893. 

The investigation of the refunding committee of the Pacific 
railroads at Washington brought out most remarkable evidence 
from one of the principal witnesses, who stated that the books 
connected with the construction of the road had been burned 
or destroyed as useless trash involving the superfluous expense 
of room rent, though they contained the record of transactions 
involving hundreds of millions of dollars, a record which became 
absolutely necessary to a fair settlement between the govern- 
ment and its debtors. Also, the fact was put in evidence that a 
certain party in interest had testified before another committee, 
on a former occasion, that he was present when $54,000,000 
of profits were divided equally among four partners, himself 
and three others. None of the books of record containing this 
valuable information escaped from the flames. 

Now, under a system of public examination as often as once 
a year at least, by experts trained for that special purpose, no 
such valuable evidence could be destroyed, and I believe that 
industrials would be capable of fulfilling the highest aims of 
their beneficent purpose as originally conceived by their first 
organizers ; that is, to cheapen production, in order that con- 
sumers might reap by far the larger portion of the profits 



30 THE WALL STREET POINT OF VIEW. 

derivable from this cause, after a fair remuneration to manage- 
ment and shareholders. 

Though it would take volumes to ventilate this subject fully, 
yet I think the matters to which I have referred and the means 
of reform which I have suggested, strike at the root of some of 
the worst abuses relating to the speculative management and 
manipulation of industrial securities. The " scoops " which 
have become so frequent and so terrible a scandal in specu- 
lative circles, and which have brought such unmerited odium 
on the legitimate business of Wall Street, would be hardly pos- 
sible under a system of surveillance with a syndicate of expert, 
honest, responsible accountants as the keystone of its arch, and 
under government or state supervision. 

The more attentively and closely this subject is examined, 
the more clearly does it appear that the place of financial 
management in the industrial organization largely determines 
its success or failure. The power and ability of the capital to 
increase are liable to be crippled in every attempt if the 
financial management is slow to perceive the requirements for 
this end. The surplus must be carefully watched, and not 
wasted in superfluous expenses ; for it is through the persistent 
law of aggregation by means of the surplus that the industrial 
concern achieves its great development and expansion over 
other methods of enterprise. 

Not the least important advantage resulting from prudent, 
honest, and capable management is in preventing state inter- 
ference beyond the limits of salutary supervision, as before 
indicated, and in leaving no excuse for state control, which 
might prove destructive of the highest aims of the legitimate 
industrial, and deprive it of its greatest potentialities. 



CHAPTER VI. 

CONCERNING TRUSTS AND CORPORATIONS. 

Trusts are transformed into corporations and doing business legally. — 
How corporations with large aggregations of capital make everything 
cheaper for consumers and purchasers generally. — Amazing decline in 
prices and railroad rates, while wages are higher than ever and the 
number of employes increased. — The power of consolidations and cor- 
porations for increasing wealth, national and private, and making every- 
body more prosperous. — Interesting confession of F. B. Thurber, the 
ci-devant anti-monopolist. — He gives cogent reasons for his change of 
heart, and shows the great benefits corporations confer upon the people. 
Farmers and cotton growers more prosperous than ever, and why ? — 
Cooperation the coming power in the competitive struggle, which will 
also solve the problem of socialism. — Enough of remedial legislation 
already provided to give relief in almost any supposable case. 

TRUSTS, as such, are virtually things of the past. Those 
who are fighting them now are merely battling against the 
wind, for the so-called trusts have nearly all been reorganized as 
corporations, and as such are now presumably perfectly legal, if 
they ever were otherwise ; for investigating committees created 
for the purpose of finding causes or excuses to dismember, dislo- 
cate, and otherwise maltreat these institutions, have been thus 
far powerless to accomplish their purposes. What they have 
achieved in the way of side issues, I do not know ; but it would 
be unfortunate if all their arduous labor and patriotic exertions 
to protect the people from some imaginary foe should have 
been spent in vain. When now they clutch ferociously at a 
trust, as Macbeth grappled desperately for the dagger in the 
air, behold, it has vanished, and become metamorphosed into 
another thing, called a corporation, which the law expressly 
allows, and which, instead of being in restraint of trade, has 
been wisely designed for the promotion of prosperity and gen- 

31 



32 THE WALL STREET POINT OF VIEW. 

eral business, in which the entire community will share ; and 
instead, therefore, of the trust being " against public policy," 
the corporation is right in the line of that policy, and calcu- 
lated to confer the greatest good on the greatest number. 

These important changes in the programmes of the trusts 
might wisely have been discovered before the special committee 
of New York was appointed on this subject, thus saving money 
to the treasury of this State ; but that is a question between the 
people and their representatives. If the former want informa- 
tion in this expensive manner and are willing to be taxed to 
pay for it, that is their right ; but I cannot help thinking that if 
we had the Swiss referendum, and the people were fully in- 
formed thereby as to what their money was being spent for, 
they would be likely to object. 

In the formation of a corporation men have a right to com- 
bine or unite their capital, skill, knowledge, and experience for 
the purpose of engaging in the manufacture or sale of any article 
of commerce that the community may require, and which is 
not injurious to the health, happiness, and general comfort of 
the people. These business institutions may be organized in 
any State, without violating the law or infringing the rights, of 
any citizen. There need be no conspiracy about the operation 
unless the parties to the agreement prefer plotting and doing 
things in secret which can just as well be transacted openly ; 
but it is hardly likely that Catilines would be found in great 
abundance among men whose chief desire is to form a kind of 
partnership for doing a legitimate business. 

As a matter of fact and of history, the combinations called 
" trusts," wherever backed by large capital, expert skill, and 
great business ability, have conferred material benefit on the 
community at large and almost invariably insured the promo- 
tion of prosperity on a durable basis. They have furnished the 
people with many of the commodities of civilized existence at 
much lower prices than formerly, not only without decreasing 
the wages of labor, but in many instances increasing them, and 
eventually extending the field for a larger number of employes. 

Sugar, india-rubber goods, tobacco, leather, and a great 



CONCERNING TRUSTS AND CORPORATIONS. 33 

variety of other commodities are cheaper than at any former 
period of the country's existence, and wages are higher here 
to-day than ever they have been except in war times ; in fact, 
almost double those paid in any other country. 

As long as these corporations, combinations, trusts, or what- 
ever people may choose to call them, furnish the community 
with goods cheaper than they can be obtained elsewhere, and 
do v so within the lines of the law, they not only may be endured, 
but instead ,of being a curse to society, as some people seem to 
regard them, can be safely looked upon as a great blessing. It 
may happen that a few people will at first be incommoded by 
their methods of doing business, but it is difficult to effect any 
change or improvement for the good of the many which will 
not cause temporary inconvenience, and, in some instances, 
suffering, to a few. 

Now, it is easy to discern that the young and ambitious man 
with moderate or perhaps small capital who aspires to go into 
business for himself finds his way barred by these corporations. 
He cannot compete with them. The only resource for young 
men of some capital who contemplate business careers is to 
get together and form combinations of their own. Nothing can 
compete successfully with combinations except new combina- 
tions, and these will put new life and energy into the general 
cooperative movement. 

Cooperation needs no socialistic impetus. It can start on 
the present foundation which civilization, however imperfect 
thus far, has laid, and go on building up with the best materials 
it can command. Brain is as important as capital, and those 
who serve the people best will win. If, then, secure in their 
monopoly, their service deteriorates, new rivals will not be lack- 
ing to displace them. This point is generally overlooked by 
those who pose as anti-monopolists : that when the so-called 
monopoly begins to advance the price, it immediately invites 
competition for which the brains and the capital will be ready 
as soon as the profits of the business are large enough to arouse 
cupidity. 

Of course the corporations already in the field, composed of 

D 



34 THE WALL STREET POINT OF VIEW. 

a few members, or which combine now or shall combine in the 
future with comparatively few members, have some advantage 
over the new cooperationists with presumably smaller capital ; 
but it has been demonstrated in Great Britain that such coop- 
eration can be made to compete with most of the big moneyed 
concerns in existence. 

Similar conditions prevail in farming as those adverted to in 
the case of corporations. A young man going West would be 
foolish if he undertook alone to cope with established methods. 
He would find at the end of his first harvest that the sale of his 
crops had not come near to covering the expense of production, 
and probably that the very necessities which the farm and the 
garden had supplied to his own table had cost him about twice 
the amount for which he could have bought them in the next 
market town. The mammoth appliances made necessary by 
the latest inventions in the art of agriculture have rendered in- 
dividual enterprise with small capital almost futile, and such 
attempts at competition ridiculous. Without the means of 
keeping abreast of the times in the art of invention and being 
able to procure the latest labor-saving machinery, competition 
is out of the question in farming as in many other pursuits. So 
the advice of Horace Greeley, " Go West, young man," has no 
longer the significance it possessed when that veteran journalist 
and philosopher was in the habit of imparting it. 

Railroads afford the most conspicuous example of the forma- 
tion of big corporations with which no individual power can 
compete ; and even where governments in Europe have tried 
to compete they have failed to make money. It is to be 
hoped that the experiment will never be tried here, as there is 
no necessity for taxing the people to invest their money in 
enterprises that would be almost certain to leave the taxation 
a permanent burden on the country. 

One of the most significant examples of change of heart as 
to the morale of railroad corporations and combinations was 
afforded in the testimony of Mr. F. B. Thurber before the Lexow 
committee. About a dozen years ago he was a leader among 
an ti- monopolists, and spent about $100,000 in printer's ink, 



CONCERNING TRUSTS AND CORPORATIONS. 35 

paper, and otherwise, in addition to much valuable time in 
opposing trusts, monopolies, combinations, and corporations. 
After the experiment had cost him a vast deal, he discovered 
that many of the combinations which he had been so strenu- 
ously opposing, while working in their own selfish interests, 
were also doing great work for the benefit of the whole com- 
munity. They had builded much better than either they or 
Mr. Thurber knew, though their building was all the result of 
efforts for self-aggrandizement. 

This is an important illustration of the principle, that in the 
aggregation of wealth devoted to the promotion and develop- 
ment of great enterprises for the purpose of enriching its mem- 
bers and with little or no desire on their part to benefit the 
many, the latter have one of the best guaranties possible that 
they will be taken care of. Wealth cannot possibly combine 
and go into any business that will largely increase its returns 
without conferring much greater benefits upon the community 
than if the wealth in question had remained in its isolated 
fragments where it would in all probability have been spent 
without any extensive distribution. 

The aggregate is likely to be directed by chosen brain power, 
skill, and experience, and is almost certain to increase and mul- 
tiply by the innate power and conditions of its very existence 
and employment. 

Apropos of this benign and universal principle, which seems 
to work about as independently of the purposes and desires of 
interested individuals as the law of gravitation, I here introduce 
the testimony of Mr. Thurber in corroboration of this and other 
matters of interest on the point at issue. It must be regarded 
as disinterested in view of his former attitude, and he is a man 
of great intelligence, well versed in politics and economics, of 
thorough practical capacity, an expert accountant, and possessed 
of extraordinary executive ability in business, so that his con- 
clusions, based on his protracted experience and irrefragable 
statistics, can hardly be erroneous. When on the stand he 
referred to the fact that the consolidation of railroad organiza- 
tions was the most conspicuous example of the working of the 



36 



THE WALL STREET POINT OF VIEW. 



so-called trusts. Explaining the success of this experiment, 
and the former fears excited by it, Mr. Thurber said : — 

" There was a fear in the public mind, in which I shared, that 
these combinations and consolidations would result in exorbitant 
rates for transportation and to the detriment of the public interest. 
What the result has been is shown by the following extract from a 
report adopted by the National Board of Trade at its annual con- 
vention in 1896: i The average charge for sending a ton of freight 
one mile on thirteen of the most important railroads in the United 
States during 1865 was 3.08 cents; in 1870, 1.80 cents; in 1875, 
1.36 cents; in 1880, 1.01 cents; in 1885,0.83 cents; in 1890,0.77 
cents; in 1893, 0.76 cents; in 1894, 0.746 cents, and, in 1895, 
0.720 cents. These railroads performed one-third of the entire 
transportation of 1893, and, from the figures given, it appears that 
0.72 cents would pay for as much transportation over their lines in 
1895 as could have been obtained for 3.08 cents thirty years 
earlier.' " 

The witness produced a tabular statement showing the influ- 
ence of the Standard Oil combination on the prices of refined 
illuminating oils, per gallon, exported from the United States, 
1 871 to 1896. The prices represent the market value of article 
at time of exportation : — 



1871 

1875 
1880 
1885 
1890 

1895 
1896 



2 5-7 

14.1 

8.6 

8.7 

74 
4.9 
6.8 



He also produced the following table, showing the variations 
in the price of sugar for a number of years : — 



CONCERNING TRUSTS AND CORPORATIONS. 37 







Cents per pound. 




Average price. 


Centrifugals 
(raw). 


Granulated 
(refined). 


Difference. 


1879 

1885 

1887 


7.423 
5.729 

5-245 


8.785 

5.441 
6.OI3 


I.362 
.712 
.768 


Average 9 years . . 


6.807 


7.905 


I.O98 


1888 

1890 . 

1893 

1895 

1896 


5-749 
3451 
3.689 
3.258 
3.631 


7.OO7 
6.I7I 
4.842 
4.I4O 
4-539 


I.258 
.720 

I- 153 

.882 
.908 


Average 9 years . . 


4.291 


5.272 


.961 



On the general principles of aggregation, as he has found 
them, Mr. Thurber testified : — 

" A combination of capital in any line temporarily exacts a liberal 
profit ; immediately capital flows into that channel, another combi- 
nation is formed, and competition ensues on a scale and operates 
with an intensity far beyond anything that is possible on a smaller 
scale, resulting in the breaking down of the combination and the 
decline of profits to a minimum. The only trusts which have suc- 
ceeded for any length of time have been those which have been 
conducted on a far-sighted basis of moderate margins of profit, 
relying upon a large turnover, and the economies resulting from the 
command of large capital intelligently administered. The truth of 
this is illustrated by innumerable failures in trust organizations, 
recent Illustrations of which are the Strawboard Trust, the Starch 
Trust, the Wire Nail Trust, and the Steel Trust. There are trusts 
so-called in nearly every branch of business, and there are good and 
bad in all, but the good so far predominates that such aggregations 
of capital should be encouraged accompanied by safeguards against 
abuses. The only additional safeguards needed are for stockholders 
and investors, whose interests are often sacrificed through lack of 
publicity. So far as the interest of consumers is concerned, it is 
amply protected now ; first, by competition, as I have shown, and, 
second, by the common law, which, if invoked, will nullify any con- 
tract in restraint of trade, and under existing statutes any unreason- 
able combination is subject to indictment for conspiracy. 



38 THE WALL STREET POINT OF VIEW. 

"The popular hostility to trusts is due principally to lack of 
knowledge of their economic effects, and these are gradually 
becoming better known. There were just enough abuses attending 
them to give an excuse for sensational journalistic denunciation, 
and this has caused undue prejudice. A great politico-economic 
question like this should be considered dispassionately and all sides 
of it carefully investigated before conclusions are reached. The 
result of my many years' study of it has been to modify materially 
the views I entertained in the beginning. 

" While within the limits of a hearing like this it is impossible 
to discuss exhaustively all the varying phases of so large a subject, 
I have endeavored to present to your committee the thoughts 
which have come to me in a somewhat extended observation and 
study of the phenomena attending the great economic revolution 
now in process of development, with the hope that they may have 
suggested some points which are worthy of further consideration 
and which may aid your committee in arriving at wise conclusions." 



Senator Lexow wished to know whether the witness favored 
legislative supervision of prices. In answer to questions, Mr. 
Thurber said that he believed that competition against the 
American Sugar Company was increasing and would continue 
to increase. 

Mr. Thurber did some sums in arithmetic to show that the 
price of granulated sugar was 6.77 cents per pound for five 
years preceding the Trust, and for the first five years subsequent 
it was 5.97. 

" Do not the large dividends," asked the Assemblyman 
Mazet, " prove that the consumer does not get the whole bene- 
fit?" 

" Certainly," was the reply. 

" In my own business," he said, " I would never again incor- 
porate if it could be carried on individually." He admitted 
that speculation in stocks was possible when they were listed, 
but added that thousands of corporations did not list their 
stocks. He cited the Standard Oil Company as a conspicuous 
example of a company whose stock was not used for specula- 
tion. 



CONCERNING TRUSTS AND CORPORATIONS. 39 

One of the most important points in the testimony of Mr<, 
Searles, the Secretary of the American Sugar Refining Com- 
pany/ in favor of the plan of combination, was that which he 
gave regarding the way in which consumers were benefited by 
the competition of the company against London speculators. 
He was very positive as to the evil arising from the attempt of 
legislation to drive capital from the State, and contended that 
combinations were more helpful than injurious to the interests 
of labor. He said : — 

" Our prices are controlled largely by the London market, which 
is distinctly a speculative market. The speculators there speculate 
against the needs of the world. They say that the American Sugar 
Refining Company will have to have so much sugar. We will 
hold this sugar until we make them pay our price. This is specula- 
tion against our country's need for the commodity. Now, with our 
vast capital, we have been able to go to other markets ; we have 
been able to go to the uttermost parts of the earth, and to purchase 
our supply before it got into the hands of this speculative market. 
In that way we have time and time again beaten that market out, 
and the price of sugar has thus been kept low. If in place of this 
great combination of ours, this aggregation of capital, there had 
been fifteen or twenty smaller concerns, no one of them would have 
been able to go to the lengths that we were able to go, and they 
would all have been held up by the London speculators. This is 
one of the most important of the benefits that the consumer has 
received.'" 

He was asked whether he thought that his organization was 
a philanthropic organization, and answered : — 

" I have distinctly stated to you that we are in no wise a philan- 
thropic organization. We are an organization in business for the 
purpose of making money. We find that the greatest profit is in the 
reduction of the price of our commodity to the lowest possible point, 
because that very largely increases the consumption. Where we 
make less a pound we make more pounds and more profit. In tell- 
ing you the advantages of this combination, however, I have 
omitted to tell you one of the most important things of all — that 
is, the value of the combination of technical knowledge and the 
ability of the people who conducted the business when it was cut 



40 THE WALL STREET POINT OF VIEW. 

up. At the time that the trust was organized each concern had 
appliances that were considered secret. All of them were of con- 
siderable value. When the trust was organized, and the heads of 
the various concerns came together, all of these valuable appliances 
were combined, and their use was extended to all the plants. 
There was a combination of all the knowledge and the technical 
skill, and it was all utilized for the common good." 

When asked if combinations of capital made labor suffer, he 
replied : — 

"They certainly do not. There is a law, let me tell you, sir, 
higher than the State of New York. That is the law of supply and 
demand. No trust has ever been yet organized, no corporation has 
ever been created, and there never has been any combination of 
capital of any sort big enough to violate that law. As I told you, 
hundreds of millions of dollars are in New York waiting to be put 
into industrial pursuits ; but if all the hundreds of millions were 
put in one industry, the violation of the law of supply and demand 
would bring about the destruction of all the wealth. The consumer 
is amply protected by the operation of this law, just as the combi- 
nation of capital is held in check by it." 

I think the best and strongest side of the so-called " trusts " is 
very ably and clearly stated in these two citations. It may be 
said that Mr. Searles is an interested party, but the same criti- 
cism will not hold good in the case of Mr. Thurber ; for while 
admitting the success of the principle of combination and its 
soundness in theory, he still seems to adhere inwardly to his 
old love of individual independence in doing business. This 
would seem to amount to the fact that he does not love his 
share of the combination profits less, but his individuality 
more, and does not in any respect shake the force of his 
opinion and arguments in favor of the combination scheme of 
doing business. 

The prices to which the products of these corporations have 
been reduced in a comparatively short time, leave the oppo- 
nents of the consolidation methods without any solid ground to 
stand upon. The chief argument used from time immemorial 



CONCERNING TRUSTS AND CORPORATIONS. 41 

has been the danger of the corporations charging exorbitant 
prices when they are able to control the situation ; but except 
in a few isolated instances, which are the exceptions that only 
prove the rule, they do not succeed in controlling the situation, 
and the foregoing statistics of constantly declining prices are 
the best answers to all such objections and fallacious arguments. 
Would any of the objectors to railroad consolidation wish to 
go back thirty years and pay three cents per ton per mile 
instead of three quarters of a cent, for the sake of having the 
corporation system changed into the old plan of individual 
ownership and competition? To state this question clearly is 
to answer it. Would anybody, except a few people on Staten 
Island, who have been born there, lived to a ripe old age, and 
expect to die there, as some of their ancestors have done, with- 
out ever seeing New York, agree to go back to the old pas- 
senger rates, with all the inconvenience attending the system? 
No. People who are in the habit of using railroads do not 
wish to go back to the conditions which prevailed thirty years 
ago, and which, without corporations, would doubtless prevail 
still to a very considerable degree. People in general, in all 
lines of business, are better off now than then. If the changes 
at first threw some out of employment, the improvement and 
extension in almost every sphere of human energy and indus- 
try have ultimately given employment to many times more than 
suffered any deprivation from the change which brought gen- 
eral prosperity. 

Some people, it is true, may have suffered temporarily from 
this very prosperity, which included in its capacious scope the 
cheapening of all products by improved machinery. The 
farmers have occasionally been complaining as sufferers from 
this cause, and under the bad advice of selfish politicians and 
ignorant legislators have been instrumental in causing much 
mischief and seriously retarding the growth and advancement 
of some of the western and northwestern States ; but the mal- 
contents, in this province of industry, are now reduced to a few 
impotent and harmless grumblers, who have not been able to 
take advantage of the progress and discovery of the age, and 



42 THE WALL STREET POINT OF VIEW. 

think that the march of intellect and invention should wait 
until they get sufficiently animated to join the procession. 
Such processions, however, do not wait on laggards. They are 
on forced marches to wider and more promising fields of dis- 
covery, and the laggards must take care of themselves as best 
they can, or suffer the consequences. Surely the farmer is 
better off to-day with wheat 70 cents a bushel in Chicago than 
he or his predecessor was during the period prior to the war, 
say from 1855 to i860 inclusive, when the average price for six 
years was $1.69, and the highest in 1855, $2.43^. When he 
takes into account the reduction in transportation charges, the 
facilities for much larger production, and the cheaper rates at 
which he can buy everything he needs (under a Republican 
administration, at least), he is in a much better position than 
his father or his grandfather was in ante-bellum times when, 
not "George IV. was king," but General Jackson; or at more 
recent dates which we could name. Farmers are better off 
and more independent, viewed as a confraternity or brother- 
hood, than any other secular denomination of our citizens ; 
and this applies, of course, in especial degree to those who 
have kept abreast of the times in making use of modern 
inventions. 

Let us take a cursory glance at the cotton planter, for in- 
stance. He is better off now than when "cotton was king." 
Cotton was formerly sold at 9 to 10 cents a pound. In 1833- 
1842 inclusive, the average price was 12 cents; in 1843-1846, 
it fell to 6^, but again, in 185 5-1 860, it rose to io|-. Now it 
is around 6^- and 7 cents, and occasionally higher or lower. 
But the immense increase in production through machinery, 
and the utilization of portions of the product that were 
formerly discarded as refuse, such as cottonseed oil, coke, 
etc., by which means the producer is enabled to realize about 
a cent and a half per pound, brings the net return to the pro- 
ducer up to about the old standard. 

It seems to me, so far as the corporations are concerned 
with the investigating committees of this State, that the latter 
are too zealous in explaining with exactitude the letter rather 



CONCERNING TRUSTS AND CORPORATIONS. 43 

than the spirit of the law. Section 7, relating to "combina- 
tions," for instance, reads as follows : — 

" No stock corporation shall combine with any other corporation 
or person for the creation of a monopoly or the unlawful restraint of 
trade or for the prevention of competition in any necessary of life." 

There is a foot-note to this section in the statutes which reads 
thus : — 

" This section is not intended to prevent the consolidation of cor- 
porations engaged in the same business. 

" Cameron v. N. Y. & M. V. Water Company, 62 Hun., 269. 
"16N. Y. Supp., 757. 
"42 N. Y. St. Rep., 912." 

Now, the sugar corporation and others similarly organized 
contend that they have rendered full compliance with the 
terms of this section and in accordance with the decisions 
herein cited. They allege that the field is open for competi- 
tion, and show, as in the case of the London speculators in 
sugar and the perpetual formation of competing sugar corpora- 
tions, that they themselves do not control the trade, and that, 
so far from aiming at higher prices, they have consistently held 
to the principle in theory and demonstrated it in practice that 
they have been constantly aiming at and actually reaching 
lower prices, and that in the success of this operation they 
have found their highest profits. 

Now, where do the objections come in, if these conclusions 
are demonstrable ? It is for the reader to see whether the so- 
called trusts or the investigators have made out their case. I 
have presented their best arguments as plainly as I know how, 
and I leave the inference to the reader. , 

One thing appears pretty clear. There is no wrong which 
these corporations are capable of inflicting for which either the 
common or the statute law, or both, do not provide a remedy, 
a sufficiency of the latter for this purpose being already on the 
statute books. Then why require more laws until these are 
tried and found wanting ? f 



CHAPTER VII. 

THE ART OF MAKING AND SAVING MONEY. 1 

Numerous opportunities for making money. — How to embrace them, and 
how to begin the work of accumulation. — It is easier to make than to 
save money. — The small beginnings of prominent millionaires, and how 
they made their fortunes. — Industry, perseverance, honesty,. and thrift 
must be associated with the methods of all who aspire to success in life. 
— Necessity has been the great stimulus in the eminent examples here 
cited. — Prudence, forethought, and sage advice required for successful 
investment. — Begin right, early in life. 

IT does not require a great genius to make money. The 
accumulation of wealth is, after all, an easy matter. It 
does not require education, breeding, or gentle manners, and 
perhaps even less than people imagine has luck anything to do 
with it. Any man or woman may become wealthy, if he or she 
begins aright. The opportunities for gathering the nimble 
dollar are very numerous in this country. But there are cer- 
tain fundamental rules that must be observed. 

The first step to acquiring a fortune lies in hard work. I 
could give you no better advice than that given by Poor Rich- 
ard : " Save something each day, no matter how little you earn." 
Cultivate thrifty habits. Make your toil count for all that you 
can. Always save some portion of your wages, and then be on 
the alert for investment. If you do this wisely, your money 
will begin to accumulate, double, treble, and in a few years, 
perhaps, you may be a millionaire. 

The beginning is the most difficult. Lay a good foundation 
for your fortune. Be brave, be generous, be helpful, be honest, 
do not overwork, keep in good health, cultivate your mind, be 

1 This chapter was published originally in an article in the Ladies' Home 
Journal. 

44 



THE ART OF MAKING AND SAVING MONEY. s 

pure, and to these add thrift, and you need not fear. You 
cannot fail. 

I would say to all fathers and mothers, teach your children 
the value of money. When they are old enough, make them 
understand the worth of a penny. From the child's savings- 
bank in the play-room to the millionaire's bank account is not 
a long step. It is a short and easy span. 

Keep a bank account. 

When you have saved one hundred, or two hundred, or five 
hundred dollars, look about for a good investment. Do not 
take up this or that scheme at a venture, but examine it care- 
fully, and if you see your way clear, put your money into it. 
Real estate is usually a good investment. More money has 
been made in real estate than you could estimate in a day. A 
first mortgage is, in nine cases out of ten, safe. But take 
advice on the subject before you invest. Go to some good 
conservative man and get his views. I should advise the same 
course if you should put your money in stocks or bonds, or 
railway shares. In fact, I should urge, before you invest a 
penny, that you get the best counsel on the subject to aid you 
in taking the right course. 

If your first investment prospers, by careful management, 
and by always being on the alert, you can increase your fortune 
by reinvesting your profits. 

A man who had only a few hundred dollars left out of a for- 
tune, called one day at a banking house and asked to see the 
manager, who was a man of conservative mind and fully ac- 
quainted with the best and most profitable investments. Throw- 
ing down his roll of bank notes, he said : " Invest this for me. 
Use your pleasure with it. I'm going to the country for the 
remainder of the summer. I will leave my address with you, 
and you can let me know what you. do with it." The man 
walked out, and was not seen again for many months. His 
money was judiciously invested on his carte blanche order, and 
began to accumulate. The house duly informed him, accord- 
ing to its business methods, of his good luck, but nothing was 
heard from him for some time. Some months afterward he 



46 THE WALL STREET POINT OF VIEW. 

presented himself at the banking-house, rosy health beaming 
in his face, well dressed and portly. The manager failed to 
recognize him at first, but when his memory was refreshed he 
recalled the circumstances of the case. This was an example 
of a man who more than doubled his savings by simply taking 
the advice of an experienced and reliable man. And this is 
not an exceptional case. 

How did Samuel J. Tilden attain his elevated position and 
immense fortune ? Simply by the exercise of thrift and indus- 
try, together with a certain degree of common sense ; added to 
the capacity for taking advantage of the chances thrown in his 
way, and his cleverness in turning them to the best account. 

It will not do for any one to sit down and wait for the com- 
ing of wealth and fortune. Industry, persevering and untiring, 
is essential to the accumulation of money. I have myself 
some little knowledge of the toil attendant upon the amassing 
of wealth, and I have the highest respect and sympathy for the 
man who, in the face of adverse circumstances, turns his pen- 
nies into dollars, and his dollars into millions. 

The life of Commodore Vanderbilt affords singular scope for 
reflection on the immense possibility of a great business capa- 
city to amass a great fortune in a few years, especially in this 
country. From being the possessor of a row-boat on New York 
Bay, he rose in sixty years to be the possessor of $90,000,000. 
William H. Vanderbilt, his son, obtained $75,000,000 of this, 
and largely increased the fortune before his death. 

It has been truly said that any fool can make money, but it 
takes a wise man to keep it. William H. Vanderbilt's ability 
was signally displayed in keeping intact this great fortune, 
besides adding as much more to it. I make special mention 
of Mr. Vanderbilt because he was not a speculator, in the true 
sense of that term. He was, first and for all time, an investor. 
And every man in this great Republic has the privilege of walk- 
ing in his footsteps. 

Collis P. Huntington came to New York when a boy of fif- 
teen, without a penny. His father was a farmer and small 
manufacturer. The youth early showed great shrewdness in busi- 



THE ART OF MAKING AND SAVING MONEY. 47 

ness, and unlimited energy and resolution. But success is not 
usually attained without long and persistent effort, and this Mr. 
Huntington found to be the case. After years of hard work 
his fortune was made, and now he is worth about $30,000,000. 
He is still, however, a hard worker, and employs, directly or 
indirectly, thirty thousand men. 

Leland Stanford received an academical education and com- 
menced the study and practice of law. At twenty-eight years 
of age, a fire wiped out his law library and other property, 
which led him to the West in search of better fortunes. Here 
his native shrewdness and energy asserted itself, and soon the 
dollars began to multiply. When he died he was worth from 
$25,000,000 to $30,000,000. 

Darius O. Mills is one of the most notable figures daily seen 
down town in New York. He was born in a small town on 
the Hudson River some sixty years ago, and began life in very 
humble circumstances. His courage was equal to that of a 
Richelieu, and his caution, conservatism, energy, and industry 
were all fully developed. He has always been dependent on 
his own exertions, and has fought his way up in life by sheer 
force of his own keen intelligence and undaunted enterprise. 
In the battle of life he has achieved signal success. He is 
worth about $40,000,000. 

John W 7 . Mackay was born in the humblest circumstances 
in Dublin, Ireland, some fifty-five years ago. Coming to this 
country very early in life, he worked for a time on board ship. 
During the years that followed, in whatever occupation he 
engaged, he labored industriously and faithfully. He saved 
his money, and watched his opportunity, which so very few 
people do. He is now twenty times a millionaire, and all by 
reason of hard and continuous effort and thrift. 

The late James C. Flood was once a poor boy of New York 
City, and became worth more millions than can be exactly 
estimated. He made his money by shrewd and successful 
investment, and by the exercise of energy, self-reliance, and 
thrift. His rise was remarkable, but he showed himself equal 
to the surprising good fortune which attended his strange 



48 THE WALL STREET POINT OF VIEW. 

career. And that was no small thing. It is a great matter to 
be able to view one's success without any untoward feeling of 
exultation. 

The wealth of the Astors is remarkable for the way it has 
been kept intact, and for the steady augmentation which is 
taking place. The elder Astor made a mint of money out of 
the fur trade, and would have continued in that business, but 
he found that investment in real estate was vastly more profit- 
able. The family has steadily adhered to this line of invest- 
ment through four generations. 

George Peabody was a poor Massachusetts boy who, by hard 
industry, rose to be one of the great millionaires of his day. 
His fortune at one time exceeded $10,000,000, and during his 
lifetime he gave away more than $7,000,000 to charitable 
purposes. His millions were acquired by the saving of pennies, 
and by the exercise of thrift, honesty, and persevering effort. 

Alexander T. Stewart, "the merchant prince," amassed his 
millions by close attention to business and by the aid of shrewd 
common sense and thrift. He was reputed to be one of the 
three wealthiest men in the United States, Commodore Vander- 
bilt and John Jacob Astor being the other two. He left an 
estate exceeding $25,000,000. 

Peter Cooper had a hard time getting an education. He 
was born in New York, one hundred years ago, and at the age 
of seventeen was apprenticed to a shoemaker. He tried his 
hand at several trades, and got together a comfortable fortune 
of about $6,000,000, through unremitting toil, conscientious 
devotion to duty, and economical habits. 

August Belmont came to New York poor, and lived to be 
worth millions. Prudence, acuteness, and sagacity were the 
instruments by which his wealth was accumulated. His suc- 
cessful career is an illustration of the fact that this country 
affords a fine opportunity for the intelligence, thrift, and in- 
dustry, not only of native Americans, but of the Republic's 
adopted citizens. 

Cyrus W. Field is another apt illustration. He has been 
termed a locomotive in trousers. The simile serves to convey 



THE ART OF MAKING AND SAVING MONEY. 49 

an idea of the indefatigable energy of the man. His indomi- 
table resolution and his energy of character placed him high 
among the distinguished men of the age. 

Vice-President Morton received his business training in the 
dry-goods trade. Then he became a banker. In his youth 
he had to shift for himself. Necessity is the stimulus that men 
of real ability require. He amassed his large fortune by tire- 
less effort and the exercise of shrewd common sense. 

Russell Sage, as a boy, was employed in a village store. 
His business aptitude early manifested itself, and in six years 
he bought out his employer. He is one of the largest capital- 
ists in the country, and all his millions have been rolled up by 
energy and thrift. 

John Wanamaker, Chauncey M. Depew, James M. Brown, 
Anthony Drexel, Moses Taylor, George W. Childs, J. Pier- 
pont Morgan, and a host of others, are men who have fought 
their way to prominence and affluence by sheer force of integ- 
rity, pluck, intelligence, and industry. 

The lives of all the men mentioned in this chapter are in- 
stances of what can be attained by any boy or man in America. 
They are eloquent testimony of the truth that industry, perse- 
verance, honesty, and thrift can accomplish anything. A man 
who is wise, careful, and conservative, energetic, persevering, 
and tireless, need have no fear of his future. But there is one 
other thing. He must have a steady head, one that can 
weather the rough sea of reverses, from which no life is alto- 
gether free, and one that will not become too big when success 
attends his efforts. 

Keep out of the way of speculators. Take your money, 
whether it be much or little, to one whose reputation will insure 
you good counsel. Invest your money where the principal is 
safe, and you will get along. 

But do not forget the acorns. See that you begin aright 
early in life. Save your money with regularity. By so doing, 
you will more than save your money ; you will make money. 



E 



CHAPTER VIII. 

BUSINESS EDUCATION. 

How the business prospects of young men of the present day compare with 
those of twenty-five or fifty years ago. — A much better start in life pos- 
sible now than then, as proved by historical facts. — The young man of 
to-day as compared with his grandfather at the same age. — How mil- 
lionaires of old were made, and how young men now want to become mil- 
lionaires by jumping over the intermediary steps and omitting the hard 
work. — Certain delusions about business success criticised and some 
cordial advice vouchsafed. — Opinions old and new on college and clas- 
sical education and the value thereof in a business career. — Macaulay's 
views. 

THE question is frequently put to me : " Do you think there 
are as good chances now for young men to make their way 
in life and for some of them to become wealthy, as in the 
past, say from a quarter to half a century ago?" 

Yes, I should unhesitatingly answer, the opportunities are 
quite as favorable, and in many instances much more so ; but as 
to the young men themselves, that is the question. In fact, the 
start in life for a young man fifteen years of age is much easier 
now than it was then. For instance, the parents of such a 
youth who were intent upon getting him a start in an office in 
former times were obliged in most instances to pay fifty dollars 
the first year for the privilege. At the end of the second year 
he received fifty dollars, and fifty dollars advance for every year 
afterward until the end of his fifth year, which completed his 
preliminary business education, or rather his apprenticeship. 

Then, of course, he was employed according to his value as 
estimated by his ability and the use which he had made of his 
five years' experience. Our young man of the present day 
enjoys the distinction of entering upon business without any 

5° 



BUSINESS EDUCATION. 51 

idea of apprenticeship, and instead of his parents having to 
advance any money to his employer, the latter gives him three 
dollars a week to start with, and before he has spent two years 
at the business he may — very often unwisely — strike for seven, 
ten, or perhaps fifteen dollars a week, in many instances. 
These aspirations would never have entered the head of his 
grandfather before he had attained his majority and cast his 
first vote, while he never knew the taste of tobacco, much less 
thought of " pooling for drinks," as many of the young office 
boys do now. It was not from such young men as these, but 
from the training of half a century ago, that the old millionaires 
who are now the envy of our young men, were made. 

But the young men of our time want to get wealthy suddenly. 
They want to reach the goal of their ambition by some imagi- 
nary rapid-transit route, and to escape the toil and patient wait- 
ing to which their forefathers were subject. 

Science, it is true, has made rapid strides since the old 
fellows laid the foundation of their large fortunes, but in all its 
discoveries science has never yet found the method of dispens- 
ing with toil of both brain and muscle in the incipient stages of 
accumulating wealth. 

The few who are born to wealth hardly need to be considered. 
The accumulators among those are comparatively few, — the 
Vanderbilts, the Goulds, the Astors, and a few others in the 
Western world being conspicuous exceptions to the general rule 
of squandering rather than augmenting the wealth left by the 
hard-working and humble ancestors. In Europe, the Roths- 
childs and the Barings are prominent exceptions. They, too, 
made more of what was left them, but, in the majority of instances, 
the proverbial wings seem to attach themselves magically to 
the hardest earned accumulations. Most frequently, before the 
third generation has enjoyed its share, and often sooner, they 
are recklessly distributed to the millions. 

This law of distribution affords one of the most remarkable 
examples of the irony of fate, manifesting its workings and 
results by inscrutable methods. In the periodical distribution 
of wealth, the highest order of intelligence rather than the 



52 THE WALL STREET POINT OF VIEW. 

blind happenings of chance would appear to be behind the 
active and mysterious agencies which carry out what seem in 
most instances to be the beneficent designs of Providence. No 
benevolent institution could do the scattering abroad of this 
surplus wealth in a more general or a more equitable manner, 
— no, not if all the benevolent institutions in the country should 
form a grand trust or corporation with the design of engag- 
ing in the dissemination of riches. 

Many young men, as well as some old ones, are under the 
delusion that the big fortunes now in existence form mountains 
in the path of modern individual enterprise, which can never 
be ascended by the present generation, except by lucky chances 
in speculation, such being the methods, as they presume, by 
which these mountains attained their present altitudes. Some 
of the more foolish ones would like to see these stupendous 
heights above the surface of general prosperity demolished by 
terrific and destructive forces, ignorant or unmindful of the fact 
that they constitute the chief fund from which capital is drawn 
for the development of all great enterprises and for the advance- 
ment of civilization. 

It is necessary that people should be admonished of this fact, 
especially people of a speculative turn of mind, as the delusion 
when nurtured is liable to lead its possessor into all kinds of 
excesses where there may be any apparent promise of profit. 
They must be constantly reminded that these men whose pros- 
perous ventures in speculation about which they have been 
reading, had long and toilsome uphill work before they were 
able to approach the big deals in speculation and investment 
for which they became celebrated. They should read the text 
with the context. For instance, when they reflect with great 
avidity on the immense stroke of luck which attended the bold 
speculations of the eminent sire of the house of Vanderbilt, 
they should not omit the account of his hardships for a living 
in all kinds of weather in Staten Island waters in a row-boat, to 
purchase which he had earned the money by digging and plant- 
ing, early and late, a potato garden. These young men, how- 
ever, want to start with the command of fleets bearing argosies 



BUSINESS EDUCATION. 53 

to and from every foreign shore, as the Commodore did after- 
ward. But they must go through the old preliminaries, unless 
they happen to be sons or grandsons of others like him ; even 
then they cannot afford constant, luxurious repose, but must 
look diligently after the wealth of which they are virtually only 
the trustees. 

The retention and increase of these acquisitions impose a 
very heavy burden on the mind, which only a few are able to 
bear without breaking down as Robert Garrett did. 

When young men read about Jay Gould having made big 
deals in Erie and other stocks, and a fortune sometimes at a 
bound, by getting hold of two or more broken-down railroads, 
putting them together and making a good one out of them, 
perhaps they say to themselves, " Go and do likewise." But 
they find their own commands hard to obey, chiefly because 
they want to take hold of that million of dollars at once without 
having a dollar of their own, and when they fail in coming up 
to this impossible idea, they despair of doing anything. These 
over sanguine youths might find some consolation, or at least 
a salutary lesson in humility, by turning back to another scene 
in the checkered career of Mr. Gould when he was working 
for low wages in a country grocery store, studying at night the 
art of surveying, and even in his sleep dreaming of a method 
of increasing his small earnings by the invention of that famous 
mouse-trap. 

If the youths in question should become envious of old 
Daniel Drew when they think of the time that he made millions 
in Erie by his paper-mill, which turned out the certificates of 
stock faster than Vanderbilt could purchase them with all the 
money he could command and borrow, they will find a cooling 
and tranquil influence exercised on the passion of envy when 
they picture this fortunate man in early life, when he was a 
drover suffering untold hardships and miseries, driving his 
cattle from the West over the Alleghany Mountains in the dead 
of winter, overtaken by snow-storms, and with no covering to 
shield him from the blizzard. 

Instances of ordeals of similar severity in the lives and ex- 



54 THE WALL STREET POINT OF VIEW. 

perience of the greater number of those who have made large 
fortunes might be cited in sufficient number to swell this vol- 
ume to several times its purposed dimensions, and all going to 
show that these men have been nothing but hard-worked helots 
for the benefit of others, and principally for the benefit and 
pleasure of posterity, while in their own lives they were con- 
stantly subjected to the vilification and abuse of their envious 
contemporaries. 

The wealth-producers in question are in general the uncon- 
scious and undesigning instruments, in the economy and design 
of nature, for human evolution to a higher plane of existence. 
Without them it would seem that the condition we term civili- 
zation would come to a standstill or probably retrograde. As 
a rule, they are charmingly unconscious of what they are doing, 
but their works follow them all the same. 

Such are still the chances for a young man succeeding in life 
and making a large fortune ; though, after all, the latter should 
not be the highest object of human ambition. Success depends, 
as I have said above, on the young man himself. Of course, 
circumstances may either favor a man or be very much against 
him, yet favorable circumstances will avail little or nothing if 
the individual himself lacks the ability to take advantage of 
them. If a man has sufficient energy, fixity of purpose, pa- 
tience, self-denial and self-control, frugality, and economy, he 
can acquire a competence, or a moderate fortune, except in 
those rare cases where sickness or misfortune follow him so 
persistently as to make it impossible ; and this is as true at one 
period of the world's history as another. It was the case 
twenty, thirty, forty, fifty years ago, and it is the case now ; and 
just so it will be fifty years or a century from now. The exer- 
cise of the qualities that win fortune will win it in any age. 

No young man should ever despair or be discouraged in the 
pursuit of wealth so long as he retains the full use of his facul- 
ties, provided those faculties are up to the average. That is 
all that is necessary. It does not require a genius to make a 
fortune. In fact, the rare individuals with genius are not famous 
in this line with perhaps the exception of Thomas A. Edison 



BUSINESS EDUCATION. 55 

and a few others. Geniuses seem to know things by instinct, 
except the secret of accumulating wealth, and this latter, after 
all, is a very ordinary faculty, and does not require a man to be 
more than a fair scholar, as is proven by the lives of some of 
our greatest fortune-builders. This species of architecture 
requires only the exercise of ordinary endowments, directed by 
common sense and a due regard to the first law of nature — 
self-preservation. 

I have described elsewhere to some extent the apparent diffi- 
culty presented to individual enterprise on the part of young 
men emerging into business life when they find opposed to 
their comparatively small means large aggregates of capital 
managed by corporations or so-called trusts, and I have sug- 
gested the remedy : viz., to adopt the tactics of their competi- 
tors. Let such young men get together and form combinations 
of their own to go into such lines of business as may be suited 
to their tastes and capacities. There is no limit to the size of 
possible combinations, and consequently no limit to their pos- 
sible aggregate means for doing business. The remainder is a 
question of skill, experience, and enterprise. In large combi- 
nations, of course, harmony is all-important. But there is noth- 
ing in business that a few people with a few million dollars can 
do but what a few hundred people with the same number of 
millions of dollars can do just as well. The same salaries which 
are paid to the employes in a corporation composed of a few 
millionaires will afford fair wages to all the capitalists of a coop- 
erative concern, and will help materially in the struggle by ena- 
bling them, if necessary, to undersell their competitors. If not 
pressed, it need not force the competition, but can place the 
money which might go in that way to the surplus account of 
the company for further extension and betterments. There 
are five of these cooperative companies in England, paying 
almost as large dividends as any of our corporations. 

Some eminent authorities differ regarding the best field for 
youthful enterprise. Dr. Chauncey M. Depew thinks a man 
has the best chance in a young community, whereas Russell 
Sage, while he does not attach vital importance to environment, 



56 THE WALL STREET POINT OF VIEW. 

thinks it is better for a young man to remain in a big place, 
if he happens to be there. For my own part, I think the secret 
of success lies most in the ability to turn the circumstances of 
the surroundings to the best account, and the man who has the 
elements of success in his nature and character need care much 
less for the place in which his lot may be cast than for the adap- 
tation of his means to the end of success in that place. He 
centers his whole attention and best efforts on the latter, and 
does not whine over something that he does not possess. The 
best evidence that a person can give of his ability to do well in 
some other place is to succeed where he is. The world in 
general rejects all suppositions or contingent evidence in form- 
ing its opinion of his capacity. It simply looks at the result in 
the abstract. It has no time for excuses. 

If a man's character and ability, for instance, has been put 
to the test as a financier or an expert in finance, in a position 
where there was scope for the fullest demonstration of the high- 
est faculties in this field, and he has wholly failed to manifest 
any such ability, it is useless, and not only useless but ridiculous, 
to tell the people that he is an accomplished college professor 
and a mathematician second only to Sir Isaac Newton. 

Reviewing briefly the list of successful men, it strikes me that 
the most brilliant examples made no point of the field of their 
operations and adventures, and in the majority of cases it would 
seem that they had little or no choice in the matter. Those 
who would succeed must cultivate the habit of feeling at home 
wherever their lot is cast. Emerson in his essay on " Self- 
Reliance," which every young man should read and every 
traveler also, makes some signally good remarks on this phase 
of success and contentment. He says : — 

" It is for want of self-culture that the idol of traveling, the idol 
of Italy, of England, of Egypt, remains for all educated Americans. 
They who made England, Italy, or Greece venerable in the imagina- 
tion did so not by rambling around creation as a moth around a 
lamp, but by sticking fast where they were, like an axis of the 
earth. I have no churlish objection to the circumnavigation of 
the globe for the purposes of art, of study, and benevolence, so that 



BUSINESS EDUCATION. 57 

the man is first domesticated, or does not go abroad with the hope 
of finding somewhat greater than he knows. Traveling is a fool's 
paradise. We owe to our first journeys that place is nothing." 

In the spirit of the philosopher of Concord, let young men, 
and all men, try to imagine that " place is nothing," and that 
it behooves them to exert their individuality and most vigor- 
ous exertions for their best interests, irrespective of place and 
surroundings. In other words, let them be themselves and put 
forth their best energies for their own good and profit, while 
being careful at the same time to respect the rights of others. 

It is pertinent to state here that modern girls have a great 
advantage over the girlhood of their grandmothers. The voca- 
tions of the male sex have been thrown open to them, with very 
little of the old prejudices remaining, and they are enabled 
to compete with their brothers in almost every walk of life, ex- 
cept that they do not, as a rule, make good speculators, and 
comparatively few of them, luckily, see any attraction in the 
stock market. 

When referring to this subject in my former book and in va- 
rious magazine articles, I have spoken of college education and 
its inadequacy to form the minds of youth for the struggles to 
be encountered in the arena of practical business life. I find 
that time and experience are bringing many people over to this 
opinion who were formerly greatly in favor of college education. 

The conversion of college graduates and classical scholars to 
this view is not by any means a new thing, though some people 
talk as if it were. It is toward half a century since Lord Ma- 
caulay, himself a very distinguished classical scholar, wrote his 
famous essay on " The London University," in which he showed 
that the time- honored classical education of that day was, in a 
large measure, utterly useless in fitting a young man for practi- 
cal business ; and though Macaulay was an admirer of Greek, 
almost to the point of adoration, he greatly deplored the time 
that was spent studying that famous tongue, even in the old uni- 
versities, to the neglect of a thorough training in English and 
science which would far better qualify a man for the business 



58 THE WALL STREET POINT OF VIEW. 

by which he is to earn his living and make his way in the 
world. 

Many professors and presidents of colleges are convinced of 
the insufficiency of the existing system, but are shy and slow 
about confessing that they have been so long on the wrong side ; 
while some of them have become such an integral part of the 
system that it would almost be like dislocating an arm or a leg 
to disturb them in the serenity of their ancient notions. An- 
other reason that comes home to them still closer is that 
the change would deprive many of them of the means of living. 
But with most it is mere timidity of declaring any change of 
opinion that would conflict with the old conservatism, grown 
hoary under the patronage, protection, and indorsement of the 
most eminent scholars of centuries. 



CHAPTER IX. 

FALSE MEN AND METHODS ON THE STREET. 

Modern and ancient opinion on this subject compared. — How it manifests 
itself in Wall Street affairs. — The inherent capacity to resist the evil 
tendency. — Fortunes that are made by degenerates and regenerates 
contrasted. 

ONE of the popular subjects of the day is the theory of 
degeneration, which has been imbued with new life by 
that voluminous and somewhat eccentric author, Max Nordau. 

In all that has been lately written, very little has appeared to 
modify the earliest opinions on this question. The Creator 
Himself made the discovery of human degeneration at an 
early period, according to the record of Moses, who told the 
matter candidly in the following terms : " And God saw that 
the wickedness of man was great in the earth, and that every 
imagination of the thoughts of his heart was only evil con- 
tinually. And it repented the Lord that he made man on 
the earth, and it grieved him at his heart." Surely there can 
be no stronger testimony to man's degeneracy than this. 

It has been with a deep sense of my own incapacity to cope 
with the mysteries of this question that I have made several 
references to it for some years past at the request of certain 
journalists and newspaper proprietors ; but any opinion, no 
matter whence it emanates, provided the source is only human, 
must be of a speculative character. 

In Wall Street affairs we have many examples of the degen- 
erates ; but they do not belong to the ranks of the genuine 
business men, and, such as they are, they seem to be now in 
a fair way of being expelled from what is known as the Wall 
Street district. They are, for the most part, simply confidence 

59 



60 THE WALL STREET POINT OF VIEW. 

men who have not had any Wall Street training or experi- 
ence, and do not require it, since their game for making money- 
is entirely outside of, and antagonistic to, genuine Wall Street 
methods. Their system is one of misrepresentation and 
deliberate lying. They personate Wall Street methods to out- 
siders, and by this means get people in various parts of the 
country to send them money for the ostensible purpose of spec- 
ulating and investing in stocks, but the alleged purpose is never 
put into operation. The money is pocketed by the confidence 
operators, but no stocks are bought in good faith, and fresh 
victims are sought through similar false pretenses by advertis- 
ing in the Sunday newspapers and by sending circulars offering 
large monthly dividends and professing to have a " system " of 
speculation that cannot fail. Then there is another class of 
more clever swindlers who occasionally give the victim some 
chance, with the ultimate design of leading him further on and 
bleeding him more copiously. 

These are the financial degenerates of our day, often found 
in the midst of our honest business life and operations, of 
whom we must beware, and concerning whom we wish to warn 
people who are ignorant of their deceptive and insinuating 
methods. 

A feeling of regret cannot always be repressed at the view of 
the broken-down merchant, and small, timid, impecunious spec- 
ulators who frequent the bucket shops, so called, in hope of gain. 

The proprietor's game is, on the face, fair enough ; but the 
customer is so intent on digging his own pit that he fails to 
calculate the chief factor involved. The margin required is 
i per cent., and you pay one eighth commission to come in and 
one eighth to go out. Therefore, when you lose a dollar you 
lose a whole dollar • when you win a dollar you collect 75 cents. 
The odds of 100 to 75 are thus continuously against you. 

Again, the customer goes wholly on guess work. If he were 
to toss a copper as to whether to buy or sell, he might be right 
something like half the time, but if the odds are 1 to 2 that a 
stock will move in a given direction and also 1 to 2 that a 
guesser will guess right, the guesser starts in with actual odds 



FALSE MEN AND METHODS ON THE STREET. 6l 

of 4 to i against him. The bucket-shop customer may not be 
familiar with this element of probabilities, but the mathemati- 
cal professors lay it down, and Mr. Proctor mentions it in his 
treatise on gambling, and the prosperity of the bucket shops 
seems to bear it out as a truth. 

In some of these byways of finance you can buy one share. 
In others, where five shares are the smallest gamble, two, three, 
sometimes five small speculators will share in a five-share lot. 
These facts are not stated as evidences of depravity nor as the 
basis for sneers at honest and laborious poverty; they only 
tend to show that where people are unable to dig large holes 
to bury themselves in they will dig small ones. 

A pitfall in the regular stock market is the small margin 
system. There are indeed advocates of this system, on the 
ground that where the market goes against you it is better to 
lose i or 2 per cent, than 5 or 10. And where a speculator is 
in close touch with the exchange this may answer. On the 
exhaustion of his margin he may re-margin, or may let the 
stock alone until a proper time comes to buy in again. But 
if the speculator has other affairs, this system is eminently a 
pitfall. Let him buy into a stock at 75 at 5 per cent, margin, 
which is the smallest that any reputable broker will accept, even 
on stop order. It is quite upon the cards that the said stock 
will drop to 72, or 71, or 70, within a few hours, or even half 
hours, and then rally again to cost price or above. In such a 
case, with a proper margin he would not be injured ; but with 
a slim margin he has lost his total investment. 

As a matter of fact, men who speculate on small margins, 
2 and 3 per cent., acquire reckless and unreasonable habits of 
dealing, and degenerate into actual gamblers. They are almost 
certain to be losers also, because the same odds operate against 
them that we have seen operating against the bucket-shop play- 
ers. Brokers' commissions, one eighth each way, must be paid. 
On 1 per cent, margins the odds are 100 to 75 ; on 2 per cent, 
100 to 8 7^-; on 3 per cent., 100 to 92 ; whereas the operator 
who puts up 10 per cent, margin has only odds of 2\ per cent. 
against him, with a fair prospect in any ordinary condition of 



62 THE WALL STREET POINT OF VIEW. 

the market of not being sold out for want of margin. The 
man who puts up 16 per cent, usually has another 10 percent. 
in reserve, which is almost sure to carry him out in the end to 
a profit. 

One of the deepest, most precipitous pitfalls is dug for the 
unwary by the professional point-giver. King Solomon is re- 
puted as saying in the Book of Proverbs, " Surely in vain is 
the net spread in the sight of any bird," but the people who 
slide numerously and with alacrity into the holes dug for them 
by the givers of points seem to gainsay the wisdom of Solomon. 

The point- giver is of Protean build. Sometimes he makes 
your acquaintance accidentally, as it were. Sometimes he brings 
a letter of introduction from some person who does not thor- 
oughly know him. Then, again, he advertises. When he 
advertises it is done in something like the form of one of these 
announcements, which can be cut by the dozen out of many 
Sunday newspapers : — 

CONFIDENTIAL CLERK to prominent operator knows of good 
dividend paying stock that will yield good profits. Address Profits, 
185, office. 

A Great Opportunity for making money in stocks. For particu- 
lars address Active, box 202, office. 

A. — WANTED — Party with capital to take advantage of my 
reliable information on stock market. Address Success, box 24, 
office. 

If you address either of these ingenious gentlemen, he will 
call upon you if he thinks you are worth calling upon, and after 
some conversation touching the necessity of caution and con- 
fidence on both sides, and the superior sources of information 
enjoyed upon his side, he will tell you to go at once to your 
broker and buy X, Y, Z shares. That is, unless he has just ad- 
vised some other person to buy X, Y, Z ; in which case he will 
earnestly urge you to hasten, without loss of time, to sell X, Y, Z. 
As for the profits, in all cases he is to have half the net gain, 
and he leaves it to your honor to let him know what the amount 
of the gain is. 



FALSE MEN AND METHODS ON THE STREET. 63 

If ten persons act. upon his advice, five will gain and five will 
lose. The losers he has nothing to do with, he would prefer 
not to see them ; but he has the names of the winners in his 
memorandum book, and he rarely fails to collect from them. 
This pitfall looks like a shallow artifice, and it is ; but a great 
many people slide down its sides in the course of any given 
year. Else how should the professional point-giver flourish as 
he does, and have so much cash wherewith to advertise in the 
Sunday newspapers ? Among the degenerates that infest Wall 
Street, that class which has been running at intervals which are 
known as " discretionary pools " is one of the most atrocious. 
Their depredations, it would seem, have been most conspicu- 
ous among savings banks depositors, to whom they make special 
appeals in their circulars, showing the profits derivable from 
their guaranteed two per cent, a month, compared with the 
small interest paid by the savings banks. These land sharks 
were making very bold and profitable invasions on the deposits 
of many savings banks throughout the country when the police 
raids some time ago put a partial stop to their fraudulent opera- 
tions ; but they are not all dead, and new adventurers of a simi- 
lar character are springing up every day in all parts of the 
country. 

One of the worst, deepest, most dangerous, and most fre- 
quently tumbled into of all pitfalls of Wall Street is dug by 
operators themselves, and seems to be the result of a weak- 
ness of the human mind, which leads it into the practice of 
taking small profits and large losses. 

A speculator puts up 10 per cent, margin and buys X, Y, Z 
at 75. The shares fall to 74, 73, 72, and so on. Now, if he 
knows the property to be sound and really valuable, there is no 
reason why he should relinquish it merely because the market 
price is lower than it was. On the contrary, if he can afford 
the cost, it may be policy for him to buy another lot at 70, and 
even another lot at 65, besides protecting his first purchase. 

But suppose he is merely the kind of speculator whose gains 
proceed from turning a small capital frequently, is it not his 
most obviously plain course of action to drop his purchase at 73 



64 THE WALL STREET POINT OF VIEW. 

and take chances of buying in again? Most of us would say, 
" Yes, by all means." But as a matter of fact he will not drop 
out until the 10 per cent, margin is exhausted. On the other 
hand, if X, Y, Z had gone up to 77 or 78 and then shown a 
tendency to sag off, this same operator would at once have 
closed the transaction, thus showing a willingness to gain by 
twos and threes and lose by tens. 

An English novelist once wrote : " There are at this moment 
10,000 Englishmen wandering homeless and penniless over the 
continent of Europe because they would not lead trumps at the 
proper time ! " So any well-informed broker can say of his 
own personal knowledge and experience, "There are thou- 
sands of American citizens who are to-day poor because they 
would not cut short their losses and let their profits run on." 

There is also another dangerous pitfall which men dig for them- 
selves ) namely, the belief that because a certain description of 
shares mounts and soars above previous calculations of the gen- 
eral market, therefore it is desirable to buy into it after it has 
mounted during a long period of days. This belief is almost 
universal, and yet it directly contradicts our experience and the 
laws of nature. We know that the higher the wave gets, the 
weaker it is at the top, while its base is always strong ; and we 
also know that whatever goes up has a tendency to descend 
again, and that the time always comes when the holders of any 
commercial property, no matter how desirable, prefer money 
to property. 

Still, the majority of outside operators regard the market as 
strongest when prices are up and weakest when prices are 
down, and act accordingly ; whereas those who know, base 
their actions on the firm truth that the market is never so 
weak as when it is high, and never so strong as when it is low ; 
being, in fact, like that ancient wrestler who, whenever forced 
down by his antagonist so that his body touched the ground, 
immediately received from Mother Earth a redoubled allow- 
ance of strength. 

Some men are born degenerate, some achieve degeneracy, 
and some have degeneracy thrust upon them ; and one is likely 



FALSE MEN AND METHODS ON THE STREET. 65 

to meet these three kinds of degeneracy in Wall Street. I 
think, however, that of all the class, those who achieve de- 
generacy are in the majority, since " evil communications cor- 
rupt good manners. " Most men are born with a capacity for 
doing good, and they are capable of acting an honest, straight- 
forward part in business, if they will only exercise that faculty. 
Money gained by crooked business methods does not make its 
possessors prosperous for many generations, seldom even for 
one ; and I believe, if the statistics on the subject could be fully 
ascertained, it would be seen that the number who adopt surrep- 
titious means, no matter how well concealed, to succeed in life 
would show far more failures in their ranks, perhaps ten times 
more, than those who fail while seeking fortune by honest 
methods. The fortunes made by degenerates are usually built 
upon sandy and shifty foundations, while those that are amassed 
by their opposites, the regenerates, the good, and the true 
among mankind, are founded upon rock of the most adaman- 
tine quality. 



CHAPTER X. 

PANICS AND THEIR INDICATIONS. 

The causes which usually give origin to panics described. — How these 
great upheavals in business and finance may be partially avoided and 
their consequences alleviated when they do occur. — Greater elasticity 
in the methods of banking required to enable the banks to meet emer- 
gencies. — These institutions have in recent years done well when not 
handicapped by law. — They should be permitted to make more liberal 
use of their reserve to relieve financial distress. — How banks and busi- 
ness men should cooperate in times of impending crisis. — The forecast 
of the panic of 1893. 

MY belief in prophecy generally resolves itself into the 
fact that there is a great deal of repetition in all his- 
tory, and by watching the present, storing the mind with a 
careful knowledge of the past, and collating the facts thus in 
possession, a pretty good idea of the future may in many 
instances be premised without any pretensions to supernatural 
power. When events turn out in accordance with the general 
tenor of any instance of forecast, that is irrefutable evidence 
that the reasoning has been practically correct, irrespective of 
the principle upon which it may be based. 

I shall reproduce here the greater portion of an article which 
I wrote by request and which was published January 13, 1893. 
In this I stated the conditions which underlie panics, and the 
deductions were unhappily exemplified in the panic of 1893, 
which soon began. The article was as follows : — 

The query now being asked on all sides, " Will there be a 
panic in 1893?" should impress business men and financiers 
with the fact that certain peculiarities in the development and 
trade of the United States render our markets more exposed 
to peril than those of any other nation, and make the question 
of panics a peculiarly American one, as we shall see. 

66 



PANICS AND THEIR INDICATIONS. 67 

The financial crises known as panics are commonly spoken 
of as freaks of the markets due to antecedent reckless specula- 
tion; as being controlled in their progress by the acts of men 
and banks who have lost their senses, but above all as being 
easily prevented, and as easily cured when they happen. 
These are the notions of mere surface observers. They may 
be in a measure true when applied to the markets of some of 
the older countries, whose business moves in long-established 
grooves and embraces but little of the risk attendant on new 
enterprises. In France and Germany, for example, the hazards 
of business are almost entirely confined to the accidents of 
political events, and such nations are exempt from panics due 
to purely commercial causes. Panics in the United States are 
due principally to causes from which European countries are 
exempt. 

We are still a nation of pioneers. Nearly fifteen millions of 
people are added to our population every ten years. This new 
population has to subdue new territory. New lands have to 
be cleared, new mines opened, new railroads built, new banks 
created, new industries established, and new corporations 
founded. These new ventures are necessarily in a measure 
experimental. Some of them fail utterly while others succeed 
magnificently. They require large outlays of capital in advance 
of obtainable results. In many cases these outlays are met by 
borrowing, the loan being secured by liens upon the uncertain 
undertakings, and therefore lacking the stability of value that 
attaches to well-developed investments. We have thus a cease- 
less stream of new issues of stocks, mortgages, and commercial 
paper, comprising a large amount of outstanding obligations, 
liable, from the uncertainty of their basis, to wide fluctuations 
in value. Then we have also a large amount of obligations 
issued against enterprises, which, though not properly new, are 
still in an experimental stage, and the value of which is, there- 
fore, subject to wide fluctuations. Issues of this character 
naturally appeal to the adventurous instincts of our people and 
cause activity in speculation. 

The action of commerce, like the motion of the sea or of the 



68 THE WALL STREET POINT OF VIEW. 

atmosphere, follows an undulatory line. First comes an ascend- 
ing wave of activity and rising prices ; next, when prices have 
risen to a point that checks demand, comes a period of hesita- 
tion and caution ; then contraction by lenders and discount- 
ers, and then a movement, in which holders simultaneously 
endeavor to realize, thereby accelerating a general fall in 
prices. Credit thereupon becomes more sensitive and is con- 
tracted ; transactions are diminished ; losses are incurred 
through the depreciation of property, and finally the ordeal 
becomes so severe to the debtor class that forcible liquidation 
has to be adopted, and insolvent firms and institutions must be 
wound up. This process is a periodical experience in every 
country, and the sharpness of the crisis that attends it depends 
chiefly on the steadiness and conservatism of the business 
methods in each community affected. 

In times of crisis, the obligations of the enterprises so numer- 
ous in this country suffer instantly from the uncertainty about 
their intrinsic value. Holders are anxious to get rid of them ; 
banks which have advanced money on them call in their ad- 
vances, and they become virtually unavailable assets. Every 
panic that has happened since the beginning of the era of rail- 
roads in this country has been intensified many fold by the 
sudden shrinkage in the value of this class of assets, and it is 
precisely here that the aggravation and the chief danger of an 
American panic centers. Risks and . panics are inseparable 
from our vast pioneering enterprise, and all we can hope is 
that they may diminish in severity in proportion as our older 
and more consolidated interests afford an increasing power of 
resistance to their operation. I am disposed to think that in 
the future the counteraction from this source will be much 
more effective than it has been in the past. The accumulation 
of financial resource available for market purposes at our 
monetary centers is increasing at a very rapid rate. Evi- 
dence of this is seen in the fact that while the magnitude of 
our corporate undertakings is augmenting every year, we are 
also every year becoming less dependent on the money mar- 
kets of Europe, and our large corporate loans are now made 



PANICS AND THEIR INDICATIONS. 69 

principally at home. These accumulations impart elasticity to 
our financial system and serve as a buffer against great financial 
disturbances. 

I cannot refrain from expressing the opinion that there are 
permitted to exist in this country conditions which needlessly 
aggravate the perils of financial upheavals, when they occur. In 
every panic much depends upon the prudence and self-control 
of the money-lenders. If they lose their heads, and indiscrimi- 
nately refuse to lend, or lend only to the few unquestionably 
strong borrowers, the worst forms of panic ensue. If, on the 
contrary, they accommodate to the fullest extent of their ability 
the larger class of reasonably safe borrowers, then the latter 
may be relied upon to protect those whom the banks reject, 
and thus the mischief may be kept within some bounds. 
Everything depends upon anxiety being held in check by an 
assurance that deserving debtors will be protected. This is 
tantamount to saying that all depends on the calmness and 
wisdom of the banks. They may easily mitigate or aggravate 
the severity of the crisis according as they are prudently liberal 
or blindly selfish. It is, perhaps, safe to say that the banks 
never do all they may, but the banks of New York must be 
credited with having shown great sagacity in troubles of this 
kind within the last twenty-five years. They have largely suc- 
ceeded in combining self-protection with the protection of their 
customers, and the precedents they have established will go far 
toward breaking the force of any further panic. 

Unfortunately the law imposes restraints upon the national 
banks which seriously interfere with the wise discretion of those 
institutions. As the law now stands, the banks are liable to be 
wound up at the order of the government if they permit their 
lawful money reserves to fall below 25 percent, of their legal 
deposits. This establishes a " dead line " which is so dreaded 
when approached that it becomes almost a panic line. When 
that limit is reached, the banks are compelled to contract their 
loans, and, under certain conditions, the contraction of loans 
means forcible liquidation without regard to consequences. 
Thus the very contrivance designed to protect the banks 



70 THE WALL STREET POINT OF VIEW. 

becomes a source of serious danger to their customers and 
therefore to the banks themselves ; and in times of monetary 
pressure it is the most direct provocative of panic. Were the 
banks allowed to use their reserves under such circumstances, 
a fund would be provided for mitigating the force of the crisis 
and the danger might be gradually tided over ; but as it is, the 
banks can do little or nothing to avert a panic ; on the con- 
trary, the law compels them to take a course which precipitates 
it ; and when the crash has come, they have to disregard the 
law and do what they can to repair the catastrophe that a pre- 
posterous enactment has helped to bring about. This is one 
of not a few restrictions upon our national banks which should 
be stricken from the statute book. 

It was chiefly due to the prompt and liberal policy of the 
banks that the panic of 1884 was so short lived and so narrowly 
circumscribed. The results of the timely action taken by the 
managers of these institutions in that crisis prove that panics 
can be arrested by proper methods, and that quick and deter- 
mined action is indispensable in the incipient stage of the 
emergency. If bank presidents could be relied on by the busi- 
ness community to act promptly and in unison with the busi- 
ness men, as they did in this instance, threatened panics need 
have but little terror for the people who now live in constant 
dread lest an outburst of business disaster may be sprung upon 
them at any time in any decade. In the early history of panics, 
bank managers, as a rule, have acted without system, without 
judgment, and almost entirely without any well-defined plan of 
action. There has been an astonishing lack of vigor in their 
methods and purposes. 

If the panic of 1873 had received the same vigorous treat- 
ment at its beginning as that of 1884, it could just as easily have 
been checked as the latter, and the entire country would have 
been saved in a great measure from the depressing effects of that 
serious collapse and its attendant disasters, which caused a state 
of general prostration for five or six years succeeding. These 
years, from a business standpoint, appear as a blank in the his- 
tory of the country's progress. It was the disturbing element of 



PANICS AND THEIR INDICATIONS. 71 

panic makers, who generally constitute one of the most potent fac- 
tors of disruption to be dealt with in seasons of business trouble, 
that caused the greater part of the mischief at the time of Jay 
Cooke's failure in 1873. The holders of Northern Pacific bonds, 
finding then that the security was no longer equal to that of 
government bonds (as they had been taught to believe), but 
was apparently worthless, became panic stricken at their losses, 
and were all transformed into panic makers, infusing the spirit 
of distrust into every one with whom they came into contact, 
until, like a fatal virus, their terror inoculated the whole coun- 
try, spreading business disaster far and wide. 

It is to be hoped that in future legislation on currency re- 
form. . ample provision against the emergencies liable to arise 
out of panics will be regarded as of the very highest importance. 

Referring to my own forecast of the panic of 1893, I think I 
may afford to lay modesty aside in view of the value of the facts. 

The following communications were written a few months 
prior to the outbreak. Then was the calm before the storm, 
but the rumblings of distant thunder were occasionally heard, 
for hearing which I do not take any special credit to myself or 
pretend that I have sharper ears than other people. There 
was a host of bankers and brokers in Wall Street and elsewhere 
who heard those rumblings as well as myself, but only a few of 
them spoke out their minds freely, and fewer still took it upon 
themselves to caution and advise those at the helm of state. 
The storm burst at length in tremendous fury on the heads of 
all the people of the nation, but directed its most destructive 
bolts against the larger financial centers, of which Wall Street, 
of course, was the chief. 

I had taken especial pains at the time to warn the Treasury 
through President Cleveland regarding the impending danger, 
and to suggest how it might be averted. I wrote to him as 
follows : — 

" New York, March 28, 1893. 
u Mr. President : — In view of the fact that the United States 
Treasury gold balance is now so low, while the gold balance in the 
banks is in a far more satisfactory condition, it would appear advan- 



J2 THE WALL STREET POINT OF VIEW. 

tageous to strengthen the Treasury gold balance through a negotiation 
of bonds. The banks, I find in a canvass I have made amongst many 
of the large ones, are perfectly willing to part with $25,000,000 of their 
gold for bonds, as they are anxious to do all in their power to uphold 
the government credit. Such a negotiation as this could be better 
effected now than later on, and its moral influence would be to restore 
confidence, now on the wane, in the ability of the government to 
continue gold payments. 

" Respectfully yours, 

"Henry Clews." 

The time at which this letter is dated was very opportune 
for obtaining enough of gold through the channels indicated 
therein, and a loan of twenty-five millions then would have 
been more efficacious in allaying the excitement and impeding 
the panic than four or five times that amount a few months 
later ; and, moreover, one hundred millions could have been 
more easily obtained then than twenty-five millions at the later 
date. History will bear me out, I think, as regards the rela- 
tive conditions of the money market and the borrowing power 
at these two dates. 

Mr. Cleveland, however, did not seem to pay any attention 
to these suggestions. Why did he not ? Simply because the 
result of their operation would have been in conflict with his 
political policy at that time, which was to let things severely 
alone, so that some pressure might come to teach Congress an 
"object lesson" which would force it to repeal the silver pur- 
chasing clause of the Sherman Law. That law, he seemed to 
think, was at the root of all the financial evil and distress with 
which the country was then visibly menaced. The gathering 
clouds which contained a terrific storm had already begun to 
darken the horizon and threatened, momentarily, to burst ; and 
if Mr. Cleveland could have foreseen the fury of that financial 
gale, I am certain that he would have used the best means at 
his disposal to weather if not to avert it. 

An adherent of Mr. Cleveland has asked me this question : 
" Do moderate men think Cleveland deliberately and purposely 
brought on the panic, to teach Congress by an object lesson?" 



PANICS AND THEIR INDICATIONS. 73 

I answered : " He said so himself, and took great pride in this 
theory at the time, on the principle of making a law obnoxious 
by executing it. He has never said he was sorry for it." 

I do not wish the reader to imagine that I think there was 
any feeling of malevolence in Mr. Cleveland's desire to bring 
about a panic just as an " object lesson " to Congress, for the 
purpose of urging that honorable body to repeal the obnoxious 
clause of the Sherman Silver Act. He had no conception of 
the baneful results that were inevitable from his more than 
executive action. He could start the panic, but could not stop 
it at pleasure. His course of procedure in the matter reminds 
me of a story that is told about a raw recruit in the English 
army. On his advent into barracks the first thing that attracted 
his attention was the cannon, a specimen of which he had 
never seen before. He was an Irishman. So he said to the 
comrade to whose care he had been consigned and who ex- 
plained the nature of the destructive weapon, " I would like to 
see how she shoots. Will you charge her ?" The comrade 
consented and put in the ordinary charge of powder, but, when 
he was about to apply the match to the touchhole, he recol- 
lected that there was no ball in the cannon, and that he could 
not give Pat a full and satisfactory illustration of its power with- 
out that necessary adjunct. "Oh, never mind," says Pat; 
" what's the use of wasting a ball on a try shot ? I'll put in 
me head, and you shoot aisy." 

So Mr. Cleveland thought he could shoot easy, but the 
range of the panic was a long distance one, and went far 
beyond his calculation. While it would be impossible to esti- 
mate the numbers of killed and wounded by that shot, it is safe 
to say that there have been very few, if any, pitched battles in 
the whole range of ancient and modern history so expensive 
as Mr. Cleveland's " try shot " at Congress. 



Part IL 

WALL STREET AND THE GOVERNMENT. 



CHAPTER XI. 

WASHINGTON DOMINATION IN FINANCE, SPECULATION, 

AND BUSINESS. 

Some inquiry into its nature. — Assumes the complexion of a centralizing 
bureau of financial information with a censorship attachment. — The 
attempt of the political power to override the financial, a failure. — All 
financial roads lead to Wall Street. — New York destined to be the 
world's center of finance. — Politics cannot rule finance except on a very 
broad basis. — Some sapient object lessons from the Constitution in their 
application to statesmanship, politics, and finance. — Justice Story's 
opinions of the duties of a President in giving information and counsel 
to Congress. — The immense powers of the President in these matters, 
and the requisite qualifications to enable him to advise. — His great 
and varied responsibility. — The "duty of a President" is more than 
" executive." — A nice distinction between advice and the power of ini- 
tiating measures in Congress. — The object lesson for the people in the 
Washington domination, and its issue. 

THE Washington domination, which had such a blighting 
influence on speculation and business interests generally 
during the greater portion of the last Democratic regime 
was so potent and peculiar in its nature and results that I 
think it is entitled to very serious inquiry with regard to its 
causes. Some of these may be at least surmised, if not demon- 
strated, by a careful study of our governmental policy during 
the period of the abnormal conditions which so thoroughly 
upset the conventional methods of Wall Street. 

The humiliation of the spectacle was sad, but it did not seem 
to strike many of the people in that light. The necessities of 

74 



WASHINGTON DOMINATION IN FINANCE, ETC. 75 

the case were all they appeared to regard, and they servilely 
conformed to them. The power was apparently too strong to 
be opposed, and the authority too autocratic to be disputed. 
It seemed very like a manifestation of hypnotic influence on a 
large scale. 

At one time the government assumed the complexion of 
a centralizing bureau of financial information with a censorship 
attachment, and though there was no censorship publicly estab- 
lished, yet it was presumable that the news went through a 
secret sifting process under the surveillance of a senatorial 
clique before it was given out for general distribution. If you 
wished to avoid irreparable mistakes, you were obliged to take 
your cue, humbly, from the seat of government, while you had 
to be careful to observe the adage, " Least said, soonest 
mended." 

Washington statesmen were at that time more conspicuous 
in the eyes of the business public, and especially in senatorial 
circles, than they had ever been before during the history of 
the Republic. Presumably it may be only a symptom or char- 
acteristic of progress ; for I believe that, without close intimacy 
and contact with Wall Street, it is impossible for the govern- 
ment to exhibit a healthy condition in some of its most impor- 
tant concerns. In fact, if it were cut off from Wall Street, 
emergencies would be liable to arise almost at any time that 
would place it in a state of helplessness though not of" innocuous 
desuetude " \ for if the government were stranded for want of 
money, the consequence would be appalling to the nation. 

It is fairly inferable, and in many instances it has been demon- 
strated, that government is largely dependent on Wall Street in 
all financial emergencies, and when the powers at Washington 
assumed the ascendency, it seemed to the apprehension of 
acute financiers and old habitues of the Street that the natural 
order of things had been reversed, and in fact that " the tail 
was wagging the dog." 

It was partly, therefore, through failure of recognizing this 
dependence of government on the great center of finance and 
attempting, instead, to exercise a domineering policy through 



j6 THE WALL STREET POINT OF VIEW. 

the chicanery of a political clique, that this temporary domina- 
tion was established. It was eventually a failure, and then the 
true attitude of the financial power had to be recognized nolens 
vokns. 

As all roads in the old world were formerly said to lead to 
Rome, so all financial roads in America must inevitably lead to 
Wall Street. There is no way but this ; and it is within the 
range of possibility, I may say probability, that at the end of a 
similar period in the unexplored future, when the Greater New 
York buildings shall have covered Long Island, Staten Island, 
the greater part of New Jersey, and extend, perhaps, even unto 
the Adirondacks, Wall Street will still maintain its prestige as 
the great loaning and financial center. Yes, more, — New 
York may then be the financial center of the world ; for Macau- 
lay's New Zealander will, perhaps, have arrived in the English 
metropolis long ere that date, and taken his stand on London 
Bridge to sketch the ruins of St. Paul's. 

Owing to the legislative delays in regard to the repeal of 
the Sherman Silver Law, as well as disappointed expectations 
regarding an anticipated bond issue that would have brought 
partial relief if it had been negotiated at an earlier date, peo- 
ple were kept in a highly agitated and nervous condition during 
the entire summer of 1893. There had been so much weary 
waiting and worry, and the agony had been so long drawn out, 
that when the relief came in November six months too late, it 
was no relief at all, for the worst had been done. 

If Mr. Cleveland had dealt with the subject in a more posi- 
tive manner in his inaugural address, that might have helped 
to turn the tide of adversity before its power had become dis- 
astrous, but an intense aversion to the silver cranks took pos- 
session of his mind and prevented him from taking the much 
wider view of the situation which the emergency required. 

When the President called the special session of Congress on 
November 1, 1893, he had no idea of the extent to which his 
" object lesson " would spread before the end of the year, nor 
of the devastation that would follow it. I will even venture to 
assert that if the advice given in a bulletin, which I published 



WASHINGTON DOMINATION IN FINANCE, ETC. JJ 

about the middle of that August, had been taken by the Admin- 
istration, the ravages of the then existent panic would have been 
neither so extensive nor so pernicious as later developments 
showed. The following is a copy of the bulletin : — 

"August 14, 1893. 

"The object lesson which was an attack against silver, really 
caused the panic, the incentive being to affect legislation so as to 
bring about the repeal of the authority of the government to pur- 
chase silver. Instead of any attempt being made to stop the panic, 
it was permitted to make headway to the point of exhaustion, the 
entire country being absolutely covered by it. Senator Hoar recently 
said over his signature, that if President Cleveland had declared in 
his inaugural address that the full power vested in him should be 
used to keep the gold and silver money of the country of equal value, 
it would have prevented the panic. I believe that to be true. Or 
if, at the time Europe commenced to draw our gold away on account 
of a scare which was founded on the fear that we were going to drift 
to a silver basis, the President had authorized the sale of only a 
moderate amount of United States bonds for gold, his action would 
have been accepted both at home and abroad as an evidence that our 
government had entered the world's contest for gold. That alone 
would have saved us from the panic ; but the President did neither 
of these two things, and thus caused an abandonment of all hope of 
relief from the administration ; so the panic has had to continue, as 
a natural sequence, to the point of exhaustion. The only hope left 
is that wise legislative action will come from Congress. It is for that 
reason that the assembling of Congress has been so universally 
desired. To restore confidence, therefore, is now the task which 
that august body has in hand. It has a patriotic work to do, and 
party animosities should not be permitted to crop out in any 
direction.*" 

Notwithstanding the plentiful advice which came not only 
from Senator Hoar and myself, but also from other quarters, 
the panic materialized because the Administration did not 
recognize the important fact in the healing art, that prevention 
is better than cure. 

It may be interesting to examine also how far the Administra- 
tion was in harmony or otherwise with the requirements of the 



78 THE WALL STREET POINT OF VIEW. 

Constitution on that occasion. The third section of the second 
article of the Constitution of the United States makes the fol- 
lowing provision with regard to the powers of the President. 
It says : — 

" He shall from time to time give to the Congress information of 
the state of the Union, and recommend to their consideration such 
measures as he shall judge necessary and expedient. He may on 
extraordinary occasions convene both Houses, or either of them, 
and, in case of a disagreement between them, with respect to the 
time of adjournment, he may adjourn them to such time as he 
shall think proper. He shall take care that the laws be faithfully 
executed ; and shall commission all the officers of the United 
States." 

It will be observed by a careful reading of this section that it 
confers immense powers. The Executive is the sole judge of 
the expediency of the measures which he may think proper to 
recommend to Congress. It is understood as a matter of 
courtesy that he will consult the Cabinet on such occasions, 
though the section does not say so. The powers which it thus 
confers were widely conceived and considered by the Fathers, 
and according to Chief Justice Story were most beneficent in 
their design. Commenting on the section just quoted, that 
eminent jurist says : — 

" The first part, relative to the President's giving information 
and recommending measures to Congress, is so consonant with the 
structure of the executive departments of the colonial and state 
governments, with the usages and practice of other free govern- 
ments, with the general convenience of Congress, and with a due 
share of responsibility on the part of the Executive, that it may well 
be presumed to be above all real objection. From the nature and 
duties of the executive department, he must possess more extensive 
sources of information, as well in regard to domestic as foreign 
affairs, than can belong to Congress. The true workings of the 
laws, the defects in the nature or arrangements of the general 
systems of trade, finance and justice, and the military, naval and 
civil establishments of the Union, are more readily seen by, and more 
constantly under the view of the Executive, than they can possibly 



WASHINGTON DOMINATION IN FINANCE, ETC. 79 

be of any other department. There is great wisdom, therefore, in 
not merely allowing, but in requiring, the President to lay before 
Congress all facts and information which may assist in their delib- 
erations, and in enabling him at once to point out the evil, and to 
suggest the remedy. He is thus justly made responsible, not merely 
for a due administration of the existing systems, but for due dili- 
gence and examination into the means of improving them. 1 ' 

It will thus be seen, by an intelligent reading of the section 
itself, and a clear conception of Justice Story's remarks thereon, 
that one of Mr. Cleveland's favorite maxims, "The duty of a 
President is simply executive," hardly covers the case. Though 
he has not the power of initiating measures in Congress, 
his authority in the way of advice comes so near it that the 
"middle wall of partition" which divides the two is trans- 
parently thin. Still, it is manifest that the Fathers must 
have intended to make a very clear distinction between the 
assertion of the one-man power and the " giving Congress in- 
formation of the state of the Union," as well as the "recom- 
mending such measures as the President might consider 
expedient." 

In his closing remarks on that part of the Constitution which 
defines the "rights, powers and duties" of the executive de- 
partment, Justice Story draws the following inferences and 
conclusions, which are worthy of being preserved in letters 
of gold : — 

" Unless my judgment has been unduly biased, I think it will be 
found impossible to withhold from this part of the Constitution a tribute 
of profound respect, if not of the liveliest admiration. All that 
seems desirable in order to gratify the hopes, secure the reverence, 
and sustain the dignity of the nation, is, that it (the executive depart- 
ment) should always be occupied by a man of elevated talents, of 
ripe virtues, of incorruptible integrity, and of tried patriotism ; one 
who shall forget his own interests, and remember that he represents 
not a party, but the whole nation; one whose fame may be rested 
with posterity, not upon the false eulogies of favorites, but upon the 
solid merit of having preserved the glory and enhanced the pros- 
perity of the country." 



8o THE WALL STREET POINT OF VIEW. 

What a valuable lesson for all who aspire to the presidency 
is contained in the noble and comprehensive language of the 
scholarly jurist, whose works shed durable luster on the bench 
of the United States Supreme Court which he adorned. The 
criticism of Ben Jonson regarding William Shakespeare, in 
literature and the drama, may very appropriately be applied 
to Joseph Story in law, jurisprudence, and ethics. " He wrote 
not for the age, but for all time.'* 

But to return to the question of Washington domination, as 
evidenced in the latter years of the Democratic regime. I 
think I have clearly shown that the assumption of the power 
which established for a time that domination over financial 
concerns and Wall Street affairs originated in a false and mis- 
taken notion of both the legislative and administrative functions 
of a great republic. The experiment in both departments has 
been a costly one, but it is now perhaps worth more than it cost 
to the people of this nation, besides being of great benefit to all 
who read our political history. 



CHAPTER XII. 

THE CHIEF MAGISTRATE. 

Qualifications indispensable for the highest office in the land. — Neither a 
towering genius nor an offensive partisan fit for the position. — The ulti- 
mate and crucial test of the popularity of a President and his consequent 
success, is the material prosperity of the country. — He has to bear the 
brunt of bad times, no matter how able and good he may be. — Failure 
of Webster, Clay, and Calhoun to reach the goal of their ambition. — 
The nation sensitive on a President's errors in finance and currency. — 
Parallel between Jackson and Cleveland. — Origin of the National Bank- 
ing System. 

WHEN we pass beyond the requirements cited by Chief 
Justice Story, opinions differ as widely as the poles 
regarding the requisite qualifications of the man who aspires to 
be the Chief Magistrate of this country. Yet there is only one 
opinion respecting certain essential qualifications among all ra- 
tional men, irrespective of politics or previous training. 

These essentials are frequently expressed more clearly nega- 
tively than positively. For instance, there is a deep-rooted 
prejudice against those individuals who for want of a better 
name are called geniuses. In the ordinary English dictionary 
the word "genius" is defined thus: "Natural endowment, 
natural faculty or aptitude of mind for a particular study or 
course of life, uncommon powers of intellect, and especially of 
inventive combination, a man endowed with such powers, 
peculiar character." The word, though Anglicized, is purely 
Latin without change of spelling. So, turning to the Latin 
dictionary, we find the definition as follows : " Genius, a good 
or evil demon attending each man or woman, or on mankind 
in general, either to defend or punish them." The word 
g 81 



82 THE WALL STREET POINT OF VIEW. 

"demon/' spelled "daemon " in Latin, and in Greek "daimon," 
simply means a spirit, without designating its quality, but in 
our modern theology it means an evil spirit. 

The common and general acceptation of the term "genius " is 
a man who can accomplish extraordinary things without appear- 
ing to make much effort, and who is sometimes without much 
education. The genius seems to possess by mysterious innate 
faculties what but few others can aim at by long and laborious 
exertion, and a characteristic of the real genius is that his judg- 
ment in matters peculiar to himself is generally almost unerring. 
Hence the ancient Greek theory and the modern Christian 
doctrine, that there are always two spirits contending for the 
control of the individual. 

It is passing strange, however, that the people of the United 
States should seem disposed to ignore a genius in their choice 
of a President, and it is paradoxical also, for the reason 
that George Washington, the first President, was undoubtedly 
a genius in the truest sense of the term ; and the five succeed- 
ing Presidents, John Adams, Thomas Jefferson, James Madi- 
son, James Monroe, and John Quincy Adams, were geniuses 
of different orders and varieties, but all on a pretty high plane. 
To John Quincy Adams succeeded General Jackson, and he 
was a genius of such an extraordinary type and so eccentric 
that to put him in the same category with the others would 
play havoc with all the rules of comparison. Without means 
and without education, by force of his indomitable will and 
fierce, untamable spirit, he elevated, or rather forced himself, 
step by step, to a judgeship and then to the presidency. The 
last step was not so extraordinary as the preceding ones, for, 
as the hero of New Orleans, Jackson became a popular idol, 
and the memory of all his savage deeds was cast into oblivion 
by that overwhelming victory ; while the man who supplied 
the sinews of war for the achievement and mortgaged his 
estate to do it is hardly ever mentioned in connection with 
that glorious and final triumph over British ascendency. Had 
not James Monroe, then Secretary of War, supplied the cash 
to equip the expedition, Jackson's heroism would have been 



THE CHIEF MAGISTRATE. 83 

ineffective, and Pakenham with his Peninsular veterans would 
have borne victorious laurels back to England. 

After Jackson, the geniuses appear to have stood aside as 
presidential candidates until Abraham Lincoln loomed up, a 
giant, and with nothing of education but self-culture. That 
acquirement was his, however, to a high degree ; and in this he 
was unlike Jackson, with whom letters were either secondary 
or ignored — though " Old Hickory " was not blameworthy for 
not cultivating a capacity and a kind of talent which he never 
possessed. If he had been the other kind of man, perhaps 
the battle of New Orleans might have gone the other way ; 
whereas, if Lincoln had gone to the front and attempted to 
meet Pickett's charge at Gettysburg, or tried to beleaguer 
Vicksburg, instead of permitting Grant to do so, slavery in 
this country might be a recognized institution to-day. But 
the " daimons " that rule the destiny of war decided matters 
otherwise, and we can only abide by the results, and in the 
strength of our national optimism go on our national way re- 
joicing. 

The prejudice, therefore, against the selection of a genius 
for President would seem to have its origin in the apprehen- 
sion that he would be likely to do something extraordinary that 
might embroil the country in war or other trouble, and, not 
being subject like an ordinary man to the will and disposing 
power of others, the step for him to a despotism would not be 
far, as in the case of Napoleon when, after the fashion of Roman 
generals, he made his election as First Consul of France a 
stepping-stone to the Empire. A cardinal objection to a 
genius for most practical purposes is that he is too self-willed. 
Otherwise he would not be a genius. 

There is some reason in this view of the case, but there is 
another cause at the bottom of the prejudice. The genius 
would not be likely to tolerate the political oligarchies that 
feed and exist on the gullibility of the rank and file of the 
voters. This is probably the chief reason why the strong man 
is feared in the presidency, while, if he is only a bogus genius 
and is trying to play the part without the capacity, he is a 



84 THE WALL STREET POINT OF VIEW. 

proper object to inspire alarm in the voters, and the indepen- 
dent suffragists should spurn the charlatan. But so long as 
" dark horses " are fashionable at conventions, and the secret 
caucus is the " power behind the throne/' it is difficult some- 
times to avoid mistakes in this direction. The first half dozen 
Presidents had no need of caucuses and other modern 
methods in politics. They had nearly all gained a great repu- 
tation as statesmen, with extensive experience both foreign 
and domestic. They were, most of them, profound scholars, 
for their times, and though several had been raised in the lap 
of luxury, they never shirked the very hardest labor and fatigue 
incident to the duties of the office. In fact, in every office 
which they had filled prior to the presidency, they had been 
found to be harder workers than those obliged to toil for a living 
from their earliest boyhood. 

Another qualification for President is that he should not be 
an " offensive partisan/ ' On this subject George Washington 
has left on record some of the best counsel to be obtained in all 
the annals of political wisdom. Speaking of " combinations and 
associations " organized for party purposes, the first President 
deplores their tendency to strike at the root of some of the 
fundamental principles of a stable government. He says : — 

"They serve to organize faction, to give it an artificial and 
extraordinary force — to put in the place of the delegated will of the 
nation the will of a party, often a small but artful and enterprising 
minority of the community, and, according to the alternate triumphs 
of different parties, to make the public administration the mirror of 
the ill-concerted and incongruous projects of faction rather than the 
organ of consistent and wholesome plans digested by common 
councils and modified by mutual interests.'" 

If this party spirit, denounced in these strong terms by the 
Father of our Country, is such an evil factor in politics gen- 
erally, it must be very bad when manifested in a candidate for 
the chief magistracy ; and the aspirant possessed of tendencies 
so dangerous to the peace and safety of the nation should be 
shunned by all good people who wish to see our political insti- 



THE CHIEF MAGISTRATE. 85 

tutions brought up to the full measure of purity and perma- 
nency. 

In pursuing this subject still farther, the man who was " first 
in the hearts of his countrymen " adduces the idea that repub- 
lics, above all other kinds of government, have most to fear 
from this "offensive partisanship." In his remarks he displays 
at once the deep insight of the philosopher, the breadth of 
vision peculiar to the statesman and diplomatist, and the keen 
perception of the practical politician. Therefore, Washington 
decidedly was a genius, as judged by this expansive range of 
mental vision and faculty for combinations. He says : — 

"The spirit of party, unfortunately, is inseparable from our 
nature, having its root in the strongest passions of the human 
mind. It exists under different shapes in all governments, more or 
less stifled, controlled, or repressed, but in those of the popular form 
it is seen in greatest rankness and is truly their worst enemy. The 
alternate domination of one faction over another, sharpened by 
the spirit of revenge natural to party dissension, which in different 
ages and countries has perpetrated the most horrid enormities, is 
itself a frightful despotism. This leads at length to a formal and 
permanent despotism. The disorders and miseries which result, 
gradually incline the minds of men to seek security and repose in 
the absolute power of an individual, and sooner or later the chief of 
some prevailing faction, more able or more fortunate than his com- 
petitors, turns this disposition to the purposes of his own elevation 
on the ruins of public liberty." 

A careful study of these precious words of Washington will 
partly explain, even in our times, why a genius, in the present 
condition of political parties with their factions and their 
jealousies, is not a desirable person for President. In the first 
instance, the right kind of genius, which presupposes moral 
worth of the highest type, could have little or no sympathy with 
constituents of this character, and opposing repellent forces are 
generally mutual in their action and reaction. These consid- 
erations and causes may, to some extent, account for the failure 
of Henry Clay, Daniel Webster, John C. Calhoun and others, 
to reach the goal of what was popularly supposed to have been 



86 THE WALL STREET POINT OF VIEW. 

their life-long and highest ambition. It is probable, however, 
that there is a great deal of popular misconception about the 
depressing effect that the disappointment left on the minds of 
these great statesmen. It is often flippantly remarked that 
Webster died of grief, from discomfiture and from pondering 
on his blighted hopes, but it appears that Webster was a man 
of too many intellectual resources to succumb to grief on this 
account, and he lived up to the Scriptural limit of three score 
and ten, while his great contemporary, Clay, died the same 
year (1852) at the ripe age of seventy-five. Both obtained 
renown that any President might envy, and several did envy. 

The probability is that the fame of Webster rests on a more 
secure basis than it would had he reached the presidential 
chair. The durable reputation which his last great patriotic 
speech in the Senate on the Missouri Compromise gained for 
him, could hardly have been enhanced by any presidential 
honors. 

In order to be a popular President the incumbent of that 
office must be a diplomat of such a character as to enable the 
country, if possible, to be at peace with all other nations, except 
when a real casus belli arises, and then the people should 
be fully satisfied as to the justice and expediency of their 
side of the dispute, as in our late war with Spain. An error 
in diplomacy is a most fruitful cause of business depression 
and financial disaster, as our international business relations 
now stand. It is therefore fatal to the popularity of a Presi- 
dent, as all the blame falls on him owing to his prominence 
no matter who else should justly share it ; popular fury must 
have an object to aim at, and the most shining mark it can 
select is the Executive of the nation. The public do not take 
time to measure and calculate nice distinctions. The question 
for the majority of them is : Does this affair in politics or 
diplomacy make it harder to get along in the world and obtain 
a living? When international trouble is threatened, all are 
pinched before they get time to think why, and it is with 
the common laborer as with the wealthy financier. When the 
landlord calls for his rent at the first of the month, and the 



THE CHIEF MAGISTRATE. 87 

wife tells her husband about it, the latter asks : " Why, what is 
the meaning of this ? He never used to be this way before, 
if it ran on into the next month. " 

" Well, he says he needs the money," she replies. 

This conversation has hardly been concluded when the little 
girl comes in from the grocery store, and says, " Here's the 
grocer's bill, and he says he wants the money right off." 

" Why, what's the matter with him ? Does he think we are 
going to run away ? " 

Johnny next arrives from the butcher's, and says : " The 
butcher told me to bring the money with me the next time I 
came. He says he can't give any more trust." 

By this time husband and wife are both terribly confounded, 
and begin to imagine that some enemy is playing a practical 
joke upon them. Then it begins to dawn gradually upon the 
mental vision of the husband that he has heard some talk about 
a war message, and that, he thinks, has given rise to all the 
trouble. But this is not all. When the husband comes home 
from his work on Saturday night, he hands his money over to 
his wife as usual. She looks at it, and says : " Where is the 
rest of it?" He answers, "That's all I got. The boss says 
money is tight. He has laid off one third of the hands, and 
others with myself will be put on half time next week." 

The speculator calls on his broker, and says, " How about 
those shares ?" 

"What shares?" 

" Oh, you know." 

" Let me see," says the broker. " What margin had you 
up?" 

" Five per cent.," confidently replies the customer. 

"Yes, my dear sir," sorrowfully rejoins the broker, "but that 
stock has declined ten points." 

" And am I wiped out? " queries the irate customer. 

"Well, of course," says the broker, "you're no tyro in 
dealing in stocks, and you were notified like others that more 
margin was required if you desired to hold on to your pur- 
chase." 



88 THE WALL STREET POINT OF VIEW. 

The customer, after being partially convinced that the broker 
has done his duty in the premises, restrains his ire and begins 
to ask about the cause of all the trouble. 

"Well," replies the broker, who is in sympathy with the 
Administration, "you have heard about that matter in which 
our national honor was involved — " 

" National honor be blowed ! " ejaculates the furious cus- 
tomer, again lapsing into his tone of irritability and abuse. " I 
want my money back." 

"Well, you see," continues the broker, "a difference of 
opinion arose between our Secretary of State and Lord Salis- 
bury, the Premier of Great Britain, and — " 

"Ah ! Now, my dear sir, what are you giving us? I have 
nothing to do with politics or the foreign affairs of the govern- 
ment, and I don't see how it can affect stocks and my margin 
in that way." 

The experience of the banker is the same. A man calls for 
an accommodation, and offers collateral similar to that which 
has been taken without hesitation on other occasions. When 
the cashier asks him for more or some of a better quality, he 
is surprised, and feels offended that his credit is beginning to 
be held cheap. When he is told that securities have depre- 
ciated within a day or two since his last visit to the bank, he 
can hardly realize it. Thus it is that the collapse in confidence 
extends its influence throughout all the ramifications of trade, 
both small and great, and the blame everywhere is hurled at 
the head of the President. The people quoted as examples, 
together with a great many others, some of whom are far 
more intelligent about cause and effect, can see only their 
own side of the question and the side that affects their 
pockets. 

It is an old saying that the nearest way to a man's heart is 
through his pocket, and there may be a mutual attraction be- 
tween the two that science has not yet discovered, even by 
the aid of the X-rays. However this may be, the influence 
over the feelings is stronger than any other of an earthly 
nature. 



THE CHIEF MAGISTRATE. 89 

There is an old proverb frequently quoted referring chiefly 
to newly married people whose worldly goods are scanty. It 
says, " When poverty comes in at the door, love flies out at the 
window." The same idea would seem to hold good in refer- 
ence to patriotism. A man can sing the " Star- Spangled Ban- 
ner,'' or " Hail Columbia," with far more gusto after a good 
beefsteak, than when he is on short rations. It is difficult to 
attune the mind to the sympathetic air of a national anthem 
under the last named conditions. Although the mind has 
great power over the body, usually, the animal part of our 
existence is liable to succumb when not duly nurtured, and its 
influence then on the mental part of our organization is not 
the most salutary. 

But nothing can explain to the people a failure of prosperity 
that has happened through any incapacity on the part of the 
Executive to deal with the currency system. The people, it 
would seem, have always shown the deepest displeasure toward 
a President guilty of any shortcoming of this character. It was 
so in the time of General Jackson, whose two terms stand out 
in bold relief both for signal and successful achievements as 
well as for conspicuous errors, failures, and defeats. The worst 
of the general's mistakes, perhaps, from the point of view now 
under consideration, was his stubborn opposition to the renewal 
of the charter of the United States Bank, which had done very 
fair financial service for thirty-six years, considering the times 
and the difficulties in banking in those days. The charter had 
four more years to run when Jackson was elected the second 
time, in 1832, and both Houses of Congress passed a bill to 
renew it. This was vetoed by the President, who also was 
guilty of the high-handed act of removing the funds to 
certain favorite State banks, against the most solemn and 
eloquent protests of Daniel Webster and others in the Senate, 
who declared that the act of removal was an illegal encroach- 
ment. 

Jackson, however, insisted on having his own way, and the 
result of withdrawing so much money from an institution that 
had the confidence of the greater number of the people and 



go THE WALL STREET POINT OF VIEW. 

putting it into several other concerns that were not generally 
regarded as trustworthy, had its inevitable result. A panic 
ensued, followed by widespread financial disaster, and the 
President's pet banks began to inflate their paper and were 
unable to meet the runs on the money that had been taken 
from the big bank and deposited with them. Jackson afterward 
recovered a part of his popularity by the determined stand he 
took against John C. Calhoun and his confreres on the subject 
of " nullification " ; but people retained a horror of him and 
were possessed with dread lest he might, by some mishap, get 
another opportunity of tinkering with the public finances. 

There seem to be some points of parallelism between Gen- 
eral Jackson and Mr. Cleveland, both in the circumstances of 
their advent to office and in their arbitrary methods. They 
both sailed into office on the crest of the highest wave of 
popularity, and their interference with the legislative branch 
of the government turned the tide of that popularity. 

But the evil that Jackson did in the financial affairs of the 
nation lived after him. Jackson left his opinions on finance to 
Van Buren as a legacy which was afterward the chief instru- 
ment in creating the panic of 1837, which has been fully de- 
scribed in my book, " Twenty-eight Years in Wall Street." A 
makeshift Treasury Bill was passed which afforded temporary 
relief, but every effort to restore the charter of the United 
States Bank was defeated by the presidential party. 

Financial hope gleamed for a short time above the horizon 
of party spirit when, after the election of William Henry Har- 
rison in 1840, Daniel Webster was appointed Secretary of State, 
and a bill was passed by both Houses, providing for the restora- 
tion of the charter of the United States Bank ; but Harrison 
died a month after his inauguration, and Vice-President Tyler 
succeeded him in the presidency. Tyler had inherited the 
legacy of political State banking, by a kind of law of primogeni- 
ture, from Father Jackson through his politically adopted heir, 
Van Buren, and so he vetoed the bill. While this bank was 
not all that could be desired, yet it was much better than the 
State banks by which it was superseded. 



THE CHIEF MAGISTRATE. 91 

It thus will be seen, from the foregoing instances and com- 
ments, that the Chief Magistrate has far greater power in 
ordering the financial affairs of the nation than is commonly 
supposed. He seldom keeps within the limits of purely execu- 
tive duty \ circumstances seem to force him farther, often, per- 
haps, in spite of himself. 



CHAPTER XIII. 

THE CLEVELAND ADMINISTRATION — FIRST TERM. 

An excellent beginning with the best intentions. — Large promises, but 
small performances. — Purposes regarding Civil Service Reform. — The 
theory was Jeffersonian, but the condition was Jacksonian. — The famous 
"Tariff Message " of Mr. Cleveland. — " A Condition, not a Theory." — 
How the purchase of a yard of calico confounds his theory and pet 
arguments in favor of free trade. — Mr. Cleveland's free-trade principles 
would bestow our home markets on foreign manufacturers and reduce 
our own workmen to indigence. 

G ROVER CLEVELAND made a good beginning as Chief 
Executive. He was a devoted advocate of Civil Service 
Reform, and I have no doubt that at first he thought his 
administration capable of making his theory and practice har- 
monize. The keynote of his avowed policy in that particular 
was embraced in the following sentence from his letter of 
acceptance for the first term : " The selection and retention 
of subordinates in government employment should depend 
upon their ascertained fitness and the value of their work." 
The whole gravamen of Civil Service Reform is contained in 
this sentence, and the merit system is clearly set forth. 

But Mr. Cleveland did not think that this expression of his 
views and intentions was quite strong enough to make clear his 
hatred of official bossism and political corruption, and, in a 
speech made some time afterward, he put himself on record 
in a way that could leave no doubt in any candid mind that, so 
far as he was concerned, the mere office seeker should have no 
show in his administration and the political trickster no "pull" ; 
and that the time-honored Jacksonian doctrine, " To the victors 
belong the spoils," should henceforth be regarded as a relic 

9 2 



CLEVELAND ADMINISTRATION — FIRST TERM. 93 

of semi-barbarism, having no place in an enlightened political 
system. 

Mr. Cleveland said : " Let there be an opportunity offered 
to the people for a change of parties of such a kind that the 
victors must give up all idea of a general distribution of offices 
among their adherents, and the people will joyfully agree to it." 

" A Daniel come to judgment," or words to that effect, cried 
many who heard or read that speech. "Here is a man," they 
said, " for the first time since the days of Lincoln who has the 
courage to combat the spoils system." 

The post-office was the place where the first test came, in the 
attempt to work out Civil Service Reform practice in accordance 
with the theory ; and it must be admitted that the test proved 
a failure, though Civil Service Reform rules and principles were 
respected in some cases by virtue of what is known as the four- 
years' rule. For instance, Mr. Pearson remained postmaster at 
New York. The main pretext for displacing post-office offi- 
cials was "offensive partisanship," a phrase which has become 
universally applicable to cases of prejudice in politics. 

Then from the post-office department a system of espionage 
spread all over the country, until politics and political patronage 
in this country sank to a low condition of degeneracy. The 
office-seeking politicians bore down upon the administrative 
forces, which were unequal to successful resistance. Whole 
departments were demoralized and broken up to serve the 
rapacity of the office seekers ; and even a large number of the 
employes of the railway mail service were discharged through 
the secret espionage plan, and their places filled by others. 

A prominent Southern senator and his following constituted 
one of the strongest forces with which the President had to 
contend, in their interference with his nominations and in 
various irritating ways known only to the trickery of profes- 
sional politics. This Southern faction had great influence 
throughout the entire term, and exercised their power for 
mischief in tying the President's hands by interfering with 
some of the most important functions of his office. We can 
now see that there were many extenuating circumstances sur- 



94 THE WALL STREET POINT OF VIEW. 

rounding some of his actions, where a superficial observer 
might imagine the President was blameworthy. This was 
nptably the case in dealing with the Southern faction, which 
took great pride in its influential power, and whose methods 
must have been very irritating to Mr. Cleveland. 

The theory of the Cleveland administration in its official 
appointments was Jeffersonian, its motto being, " Is he honest, 
is he capable ? " The practice, however, was largely Jack- 
sonian, its motto being, " To the victors belong the spoils. " 

Let us now glance at Mr. Cleveland's famous tariff message 
of December, 1887, for which it is claimed he was personally 
responsible. When that document appeared it gave rise to a 
flood of criticism, both favorable and hostile. It was con- 
sidered one of Mr. Cleveland's best literary efforts, and some 
of its sharp hits have had a wonderful currency in the news- 
papers, particularly the saying, " It is a condition which con- 
fronts us — not a theory." The condition was too much 
money in the Treasury. That condition has not given any 
trouble since a short time after that message. The great 
difficulty for a few years past has been a deficit in the Treas- 
ury, and the problem has been how to meet it. It was 
reserved for the McKinley administration to solve that problem. 

The burden of the tariff message was an overflowing 
Treasury, which was constantly becoming more plethoric, and, 
like the Augean stables, filling up twice as fast as it was emptied. 
Our presidential Hercules, as stated in the message, did all 
that was in his power to remedy the situation. He bought 
bonds, and did everything in that line which the law allowed. 
Still the currency surplus would not down, but kept accumu- 
lating until it had reached the dangerous figure of §140,000,000, 
when Mr. Cleveland scented panic in the air. There would 
surely be a commercial smash-up, he soliloquized, if that 
Treasury were not depleted or at least a vein opened some- 
where to relieve the congestion. The Treasury's great need 
was really gold and not currency at this time. The trouble 
lay in a redundancy of the former and a dearth of the latter. 
A high tariff, in Mr. Cleveland's opinion, was responsible for 



CLEVELAND ADMINISTRATION — FIRST TERM. 95 

the desperate condition of affairs, and, according to the mes- 
sage, the country was on the very brink of commercial ruin. 
This was the honest theory of the President, and, irrespective 
of politics, he had a host of followers of the same financial 
belief. 

That message was, as I have suggested, more remarkable 
for its literary excellence than for the soundness of its economic 
views. It is partly as a literary and partly as a historic docu- 
mentary reminiscence that it seems worth analyzing now, 
for its economic views are somewhat unique, and show how 
much Mr. Cleveland had to learn upon the tariff question. 
No doubt he has profited by the two great object lessons, the 
McKinley Bill and the Wilson Bill, which he has in some 
measure been forced to study since then. 

To show how mistaken his notions were regarding the prac- 
tical result of tariff laws, I quote the following from the mes- 
sage : "These laws, as their primary and plain effect, raise the 
price to consumers of all articles imported and subject to 
duty, by precisely the sum paid for such duties. Thus the 
amount of the duty measures the tax paid by those who pur- 
chase for use those imported articles." 

Mr. Cleveland could have had this argument answered prac- 
tically and refuted by the simple operation of purchasing a 
yard of calico at 5 cents, and then looking in the list of tariff 
prices, and finding that the tariff upon a yard of calico w r as 
6 cents. Of course Mr. Cleveland would say he must pay 
n cents for it. " Oh, no," the dry-goods man would answer, 
"we don't charge two prices. This is a one-price house." 
The dry-goods man might further reply : " It is a condition that 
confronts us — not a theory. Your theory is 1 1 cents ; our 
price is 5." The same rule applies in the majority of instances. 

Mr. Cleveland made a mistake in thinking that the consumer 
pays the tariff tax, when it is really the producer or the seller 
who pays it, or it may be divided between producer and con- 
sumer. But it would be much more difficult to make Mr. 
Cleveland or any free-trader understand this than the calico 
transaction, which is simple and easily demonstrable. 



96 THE WALL STREET POINT OF VIEW. 

Here is another point on which Mr. Cleveland required 
enlightenment. He said : " Nor can the worker in manu- 
factures fail to understand that while a high tariff is claimed to 
be necessary to allow the payment of remunerative wages, it 
certainly results in a very large increase in the price of nearly 
all sorts of manufactures, which, in almost countless forms, he 
needs for the use of himself and family." 

This is another instance in which the " condition " is at 
variance with the theory. There may be a few instances in 
which " the tariff results in an increase in price," but the rule 
is by no means general, and the increase is not " large," and 
where it does exist, the higher wages cover it several times 
over. Under any approach to free trade, the "increase" in 
the foreign goods would soon be twice as much. This has 
been often demonstrated, and was first clearly explained to the 
people of this country by Horace Greeley more than fifty years 
ago. 

Mr. Cleveland seemed to have got it into his head that our 
manufacturers are grinding monopolists, and that they corral 
very large profits, quite forgetting, apparently, that foreign 
manufacturers are not better than they in this respect, and 
perhaps not so good. Under his system of "reduced taxa- 
tion," as he called it then, we would permit the British manu- 
facturer to take the profits instead of our own manufacturer. 
It is easy to see the great difference it makes to us as a people 
in having the money we pay for clothing and many other neces- 
sities spent in this country instead of its being spent abroad. 
The money spent here goes to enrich us all permanently, and 
we get what we need for it besides ; but what goes abroad we 
derive no further benefit from, and it impoverishes our coun- 
try to the extent of that sum. The most unpatriotic people, 
therefore, are those who purchase foreign goods (except upon 
reciprocity principles), provided they can get what they want 
at home. 

The theory and ideas of tariff reform, according to the free- 
traders, would munificently bestow our home markets, which 
take 90 per cent, of our products, upon the competing foreigner, 



CLEVELAND ADMINISTRATION — FIRST TERM. 97 

without any compensation, except, perhaps, a cheaper suit of 
clothes once a year or so, which the impoverished laborer would 
hardly be able to purchase, as all his surplus wages would be 
divided between the foreign manufacturer and the pauper 
employes of this foreign protege* of our free-traders. I know 
that Mr. Cleveland would never admit that he is in favor of 
free trade out and out, and he may honestly believe that he is 
not ; but no fair-minded person can read his messages, his 
severe criticisms against protection, and his bitter denunciations 
of its adherents, without being forced to the conclusion that he 
is one of the most uncompromising free-traders. His saving 
remnant of protection suggests the Kentucky colonel's mix- 
ture of water with his whiskey. The Kentuckian had a deep- 
seated prejudice against taking his whiskey straight, or at least 
of being considered to do so, and when he would fill his glass 
of Bourbon to the very brim, he would say to the waiter, " Now, 
John, take that glass, keep a steady hand, mind you, and just 
pour in one drop of water, just one drop." Mr. Cleveland's 
alleged remnant of protection, whatever it is, is like the Ken- 
tuckian's drop of water, which he mixed with his Bourbon in 
order to preserve the consistency of his prejudice. 



H 



CHAPTER XIV. 

THE HARRISON ADMINISTRATION. 

Its influence on some of the consequences of the Baring panic. — The 
absence of " Jingoism " was a conspicuous feature of the Harrison 
regime. — Harrison as an orator. — His Western trip compared with the 
Eastern trip of Bryan. — His astonishing familiarity with all the States 
and their conditions, and his magnetic power over audiences, as dis- 
played in Western cities. — A thorough politician and a far-seeing 
statesman. — His cooperation with James G. Blaine in devising the 
wise policy of reciprocity which was spoiled by the Democrats. 

THE Baring failure, though its influence for universal evil 
was checked (as shown in another chapter) by the able 
management of Mr. Lidderdale, who was the chief instrument 
in adroitly using the power and funds of the Bank of England 
to avert a very extensive panic, was nevertheless followed by an 
unhappy aftermath, the effects of which were severely felt on 
this side of the Atlantic. 

Things might have been much worse here, however, except 
for two fortunate circumstances. One of these was the sound 
condition of our banks and the systematic management of the 
Clearing House which, in any threatened emergency or extraor- 
dinary tightness in the money market, issues certificates to 
tide over the trouble. The other circumstance was that we 
were blest with one of the best administrations that we have 
had since the days of Washington and Lincoln. 

The Harrison administration stands out in bold relief as one 
of the greatest in the history of the Republic. It was charac- 
terized by honesty and economy. In it Jingoism was conspic- 
uous by its absence. It was too thoroughly American for that, 
and it sought no recognition from abroad. It did not seek to 
elevate itself into public notice by any display of cheap sensa- 

98 



THE HARRISON ADMINISTRATION. 99 

tionalism. It was thoroughly unostentatious, and, avoiding all 
entangling alliances according to the advice of Washington, 
attended strictly to domestic business, which it looked after 
with constant assiduity. 

The last year of the Harrison administration, 1892, was one 
of the most prosperous in the history of the country, and, if 
General Harrison had been reelected there is every reason to 
believe that the same conditions would have continued. It 
would have been a continuous chain without a break ; but when 
Harrison left the White House the scene was changed. 

General Harrison had not long taken his departure when the 
ominous forebodings of the Wilson Bill took hold of the minds 
of the people. What was the result ? Our manufacturing 
industries were paralyzed, we had another panic on our hands, 
and the struggle against the malign influences of free trade 
went on until McKinley was elected. 

With regard to General Harrison himself, he is a man of 
unique personality and fine culture, a profound lawyer and an elo- 
quent orator ; yet he was never known to parade any of these gifts 
or attainments. His modesty in this respect has seldom been 
excelled by any one in an eminent office. His speeches are mar- 
velous for their variety ; wherein they differ from Bryan's, which 
always harp on the same theme. But General Harrison is un- 
excelled in versatility even by Horace Greeley. That W 7 estern 
trip of thirty days in the spring of 189 1 has no parallel in the 
annals of electioneering speeches — which they virtually were. 

General Harrison traveled, just as Mr. Bryan did, throughout 
the whole West and South ; he covered more ground than Mr. 
Bryan in the same time, was equally ubiquitous, and made about 
as many speeches \ but here the comparison ends. 

The speeches were of a different kind. In every separate 
State General Harrison displayed an intimate knowledge of 
that State and its people, with their habits and customs from the 
earliest times, as if he had been born there and lived among 
them all his life. Not only in variety, but even in mere number 
of addresses, Harrison leaves the free-silver orator far in the 
distance. He made nine speeches in one day, for instance, in 

LrfC. 



IOO THE WALL STREET POINT OF VIEW. 

San Francisco without repeating himself, and one of them was 
a banquet oration, regarded by both Republican and Demo- 
cratic papers as one of the greatest oratorical efforts ever heard 
in that city. 

One very conspicuous point in General Harrison's visiting 
trip was the sudden and strong attachment of the people to 
him, which thus displayed the powerful magnetism of the man. 
He had a rare felicity in complimenting the people on the good 
points exhibited in their State, and of making them feel satisfied 
with their lot and location. A good illustration is from a little 
speech in Ashland, Oregon, as follows : — 

" My friends, you have a most beautiful State, capable of pro- 
moting the comfort of your citizens in a very high degree, and, 
although already occupying a high place in the galaxy of States, it 
will, I am sure, take a much higher one. It is pleasant to see how 
the American spirit prevails among all your people, love for the flag 
and its constitution, those settled and permanent things that live, 
whether men go or come. They come to us from our fathers and 
pass down to our children. 

"You are blessed with a genial climate and most productive soil. 
I see you have in this northern part of California what I have seen 
elsewhere — a well-ordered community, with churches and school- 
houses, which indicate you are not giving all your thoughts to 
material things, but are thinking of those things that qualify the 
soul for hereafter. We have been treated to another surprise this 
morning in the first shower we have seen in California. I con- 
gratulate you that it rains here. May all the blessings fall upon 
you like this gentle rain." 

The chief qualities that characterize this speech are simplic- 
ity, terseness, directness, and a thorough appreciation of his 
audience. General Harrison has been charged with being cold, 
but the sympathetic tone in which he addressed the people of 
Ashland would seem to disprove the imputation. He may be 
cold toward those who would be incapable of appreciating his 
warmth, and between whom and himself there is no natural 
sympathy. 

Let us now regard General Harrison as a politician and a 



THE HARRISON ADMINISTRATION. IOI 

statesman. He is a man of remarkable candor and courage. 
This was displayed very prominently in his letter of acceptance, 
in which he refused to follow slavishly the platform of the party, 
but boldly expressed his own independent opinions. Candi- 
dates for the highest office in the land, or, indeed, for any office, 
are usually afraid to venture on such a course of action ; but in 
the case of Harrison it was made clear that he was a thorough 
politician as well as a far-seeing statesman. It might be said of 
him, in fact, as a great Englishman, Viscount Bolingbroke (St. 
John), said of Dean Swift ; " Turn him to any course of policy, 
the Gordian knot of it he will unloose, familiar as his garter." 
To show the depth of President Harrison's political insight, 
there probably could be no better testimony than that of James 
G. Blaine. Commenting on the political sagacity in General 
Harrison's letter of acceptance, the man of Maine said : — 

" The position of the candidate, as defined by himself, is of far 
more weight with the voters, and the letter of acceptance has come 
to be the legitimate creed of the party. Notoriously, little heed is 
given to an exposition of principles by the committee on resolutions, 
and less heed is given to resolutions when submitted to the con- 
vention at large. This springs naturally from the fact that great 
haste characterizes the preparation of the platform, and if one man 
of the committee has any political hobby that he wishes to incorpo- 
rate, he has little trouble, from the general inattention of the 
members, in compassing his end. Conventions often embody issues 
which are impracticable, and occasionally that are mischievous and 
embarrassing." 

General Harrison cleverly evaded the hobbies of the conven- 
tion, while he paid due respect to the main features of the plat- 
form. This was respectful to the convention. Mr. Cleveland, on 
the contrary, in his acceptance took no chances. According to 
Mr. Blaine he made the platform himself, quite ignoring the 
convention. It must be remembered also that Mr. Cleveland 
was consistent in the maintenance of this independent policy 
to the end of his administration. 

The policy of President Harrison toward the South was of 
the most conciliatory character, and in no instance, perhaps, 



102 THE WALL STREET POINT OF VIEW. 

did his wisdom and prudence shine more brilliantly. His sug- 
gestion to Congress that provision be made " for the appoint- 
ment of a non-partisan commission to consider the subject of 
apportionments and elections in their relation to the choice of 
federal officers " was a master-stroke of policy, especially at the 
time when Democratic politicians were attempting to inflame all 
the hostile passions of their party against the Federal Election 
Bill. President Harrison's wisdom was further shown in this 
matter by urging upon Congress the passage of a law which 
would give to the Supreme Court the appointment of the non- 
partisan commission. This took the wind out of the Demo- 
cratic sails and bereft several prominent journals of their best 
material for criticism, as well as many politicians of a prolific 
subject for discussion. 

Any review of that administration would be incomplete with- 
out a reference to those significant commercial projects con- 
templated by President Harrison and his brilliant minister, 
Secretary Blaine. I refer to the plan of reciprocity treaties 
wherever they could be profitably negotiated. Before the end 
of his administration the enterprise was well under way ; it had 
worked admirably and profitably in Cuba and in the Windward 
and Leeward Islands ; it had begun to manifest its good influ- 
ences in South and Central America, and was materially lessen- 
ing the balance of trade against us in those countries. But the 
succeeding Democratic administration did not see the incalcu- 
lable benefits to be derived from this great movement in trade 
and commerce, partly through inappreciation of its commercial 
importance, and partly, perhaps, through partisan prejudices 
because Secretary Blaine and President Harrison were its origi- 
nal projectors. It is sad to think that partisanship should block 
the way of progress in some of the most benignant and patri- 
otic enterprises ; but perhaps such things must be while two 
political parties of generally opposite views seem necessary to 
carry on the government and to maintain those checks and bal- 
ances indispensable to its stability. 



CHAPTER XV. 

MR. CLEVELAND'S SECOND ADMINISTRATION. 

How Mr. Cleveland acquired the character of an independent candidate. 
— Success of his fiscal policy, especially regarding the surplus revenue 
and the depository banks. — Making himself " solid " with bankers and 
financiers. — How it was that he was beaten by Harrison in 1888, but 
vanquished him in 1892. — How he lost his popularity by the irrepara- 
ble errors of the two object lessons. — Remarks on his sound money 
views and his indomitable perseverance. — Utterly failed to understand 
the tariff question. 

IF Mr. Cleveland had prudently followed up during his second 
term a few of the strokes of wise policy and, in several 
instances, the good guiding and prudent management which 
characterized his first administration, he might have gone down 
to posterity in the odor of political sanctity ; but his two famous 
object lessons were two unfortunate departures. 

These two object lessons were Mr. Cleveland's personal 
interference with the repeal of the purchasing clause of the 
Sherman Law of 1890 relating to silver coinage, and the Wil- 
son Tariff Bill. 

In order to understand fully the nature of Mr. Cleveland's 
second administration, it is necessary to recapitulate a few 
important points intimately connected with his first. 

After the nomination for his first term, though a Democratic 
nominee, he owed his election chiefly to those deserters from the 
Republican party who were designated " Mugwumps." His 
peculiar relationship to these independent voters made him in 
reality an independent President. He therefore acted upon 
the principle that he was the people's President without regard 
to party lines, and this idea seemed to inspire him with a feel- 
ing that, like Napoleon, he was a man of destiny. 

After Mr. Cleveland was inaugurated for the first term he 

103 



104 THE WALL STREET POINT OF VIEW. 

found an overflowing Treasury, with a consequent dearth of 
money outside. Owing to the contraction in circulation caused 
by this surplus, there were ominous forebodings of panic in the 
air. Mr. Cleveland first did all he could, as noticed elsewhere, 
in the way of buying such bonds as the government under exist- 
ing legislation had authority to purchase, but all to very little 
purpose. He then wisely resorted to the depository banks, 
putting the surplus there, and the strain was soon relieved. He 
even had the number of these banks increased for the purpose 
of putting the money into circulation. 

The situation was more alarming than many people think, 
for dangers of this kind cannot be thoroughly estimated until 
after the danger is past. Considerable money was required at 
a certain time, then not far distant, to move the crops, which 
that year gave an ample yield ; while money in Wall Street and 
throughout the country was becoming very stringent, and very 
hard to obtain. Hence is seen the financial wisdom mani- 
fested by Mr. Cleveland in augmenting the number of the 
depository banks. He issued an order through his able Sec- 
retary of the Treasury, Daniel Manning, to the effect that all 
money due the government thereafter should be paid into these 
banks, and kept in circulation, instead of having it remain 
uselessly in the government vaults; an action which had an 
immediate and soothing effect upon public feeling, restored 
confidence in business circles, and enabled the crop movement 
and other enterprises to go on without interruption. 

The banks, meanwhile, accumulated $60,000,000 in deposits 
to the credit of the government, and had this money gone into 
the Treasury instead of the depository banks, we should prob- 
ably have witnessed in Wall Street and throughout the country 
one of the worst panics on record. Mr. Cleveland and his 
Secretary of the Treasury gained great praise for the masterly 
manner in which the finances were managed at that critical 
period, and the credit is all the more due to them both, inas- 
much as it was a new experiment in government financiering 
on so large a scale, and the necessity was sprung upon these 
two officials quite unexpectedly. 



CLEVELAND'S SECOND ADMINISTRATION. 105 

The popularity which Mr. Cleveland suddenly and unex- 
pectedly acquired by this able operation put him and his 
independent party away ahead, and made him, if possible, still 
more independent of the Democrats. The confidence on the 
part of the public had developed considerably beyond even 
what it had been at the time of his election, and everybody 
seemed to feel that all matters financial, internal and inter- 
national, were safe in his hands. In fact he had become 
dangerously popular, if he had been a man imbued with one- 
man power ambition. 

This public feeling continued unabated and even waxed 
warmer quite up to the time of his second inauguration, and 
it was not therefore to be w r ondered at that a vast number of 
the people of the country wanted him again for President. 
Practically he was forced upon the convention which his man- 
agers carried by a coup, and secured his nomination in the face 
of all the opposition that an antagonistic party machine could 
concentrate against him. It was demonstrated to his own satis- 
faction and that of the public that the people were with him at 
that convention, and in such victorious circumstances, against 
such odds in the convention, why should he not have continued 
to feel that he was backed by the people, and not by politi- 
cians? Can it be matter of surprise that he fought the politi- 
cians all through his second term of office, neither asking nor 
giving quarter? He thus succeeded in making enemies of 
nearly all the powerful leaders of the Democratic party. " We 
love him for the enemies he has made," said one enthusiastic 
adherent ; but harmony between him and those prominent lead- 
ers who in a well-regulated administration should uphold the 
hands of the President was out of the question. On the con- 
trary, the antipathy was mutual and bitter, and discord was the 
natural result. The administration was divided against itself, 
and it could not stand. 

It was mainly due to these unfortunate relations between the 
Executive and the Democratic party that it became possible at 
the Chicago convention of 1896 for Altgeld, Tillman, William 
Jennings Bryan, and a few others of that ilk, to capture the 



106 THE WALL STREET POINT OF VIEW. 

convention and steal the machine of the party. The dissen- 
sions between the Democratic leaders and the Executive 
enabled free-silver cranks, anarchists, socialists, and others 
belonging to the revolutionary fraternity, to take advantage of 
the situation. Moreover, quite a number of sound-money men 
became silverites at this convention, not from any conviction 
that the theory was correct, but out of sheer antipathy to Mr. 
Cleveland. According to the adage, some of them were ready 
to cut off their noses to spite their faces. The opinion seemed 
to prevail, at least in inside circles, that the silver plank was 
inserted in the Democratic platform chiefly for the purpose of 
heading off the designs of Mr. Cleveland for a third term, as he 
was famous for springing surprises. 

In reviewing Mr. Cleveland's administration, it must be 
borne in mind that the prime cause of commercial misfortune 
lay in the reversal of national policy. The country was thriv- 
ing under institutions that had been built up as the result of 
the politico-economic experience of thirty-two years' rule of 
the party previously in power. The inevitable result of a 
reversal of governmental policy is in the upheaval of business, 
which must needs be entirely readjusted to new methods and 
conditions, with, in many instances, disastrous consequences. 

Mr. Cleveland obtained an immense vote in his third cam- 
paign, in 1892, from those who remembered his energetic 
struggle to reduce the surplus, and his able management in 
preserving the country from panic during his first administra- 
tion. They naturally favored him for another term, being 
assured that the same shrewd and sagacious policy in finance 
would direct and inspire all his efforts and actions in that 
department of the government. He retained this popularity 
and his hold on the people, notwithstanding his temporary 
defeat in 1888 and the Harrison interim ; and he came up, after 
a long rest, in 1892, potent and debonair, with the same old 
clientele considerably augmented, as the darling of the people, 
and as independent as ever of the machine Democracy. In 
fact, he had kicked the machine out of his way again, just as 
he had in 1884 defied John Kelly and Tammany Hall. 



CLEVELAND'S SECOND ADMINISTRATION. 107 

It may seem somewhat strange that Mr. Cleveland carried 
his popularity over those four years despite all the allowance 
that must necessarily be made for secret electioneering in the 
meantime ; and the most puzzling part of it appears to be that 
he could not beat General Harrison in 1888, but vanquished 
him by the large majority of 132 in the electoral college in 
1892. In 1888 General Harrison had a majority over Mr. 
Cleveland of only 65 in the electoral college. It will be re- 
membered that he severely denounced a tariff reform of 
greater protection to American industries during his first term, 
and especially in his message of 1887. This was undoubtedly 
displeasing both to wage earners and their employers. And 
it was this revulsion of feeling against Mr. Cleveland's lan- 
guage toward protectionists and his strong free-trade pro- 
clivities that worked against him in his unsuccessful campaign 
against General Harrison. 

How President Harrison in his turn lost his hold and failed 
to succeed for a second term is a long story, not in place 
here. Briefly, it was an inauspicious time, and a large number 
of voters who knew little or nothing about finance were easily 
persuaded that the President and Congressman McKinley were 
largely to blame for the Baring panic. This was one element 
which contributed to the defeat of General Harrison. "Now," 
said the independent followers of Mr. Cleveland and the stump 
spellbinders, " didn't we tell you what protection and the 
McKinley Bill would bring upon the country?" This seemed 
plausible under the circumstances, but it was only part of the 
story. There was considerable solidity behind Cleveland. The 
wealthy financiers, bankers, and others remembered his wise 
policy in establishing the additional depository banks and filling 
them with government money, and they had faith in him for 
this reason, a circumstance which alone brought a large 
contingent of the money power to his back, and contri- 
butions to the campaign fund were on an unusually liberal 
scale. Added to these facts, Mr. Cleveland was sound on 
the money question, an uncompromising gold monometallist ; 
and, as he was bold and firm even to the verge of obstinacy, he 



108 THE WALL STREET POINT OF VIEW. 

was properly considered an excellent choice to withstand the 
hosts of free-silverites whose clans were then gathering with 
hostile intent and preparing all over the West for a fierce fight. 

Another thing which favored Mr. Cleveland was the patent 
fact that President Harrison and his managers did not make as 
much out of their opportunities as they might have done. If 
Mr. Harrison had taken up the question of Civil Service Reform, 
for example, in which the first Cleveland administration failed, 
and made strenuous efforts to carry out its legitimate purposes, 
he might have been more popular for the second term than 
Mr. Cleveland. But where President Harrison made his 
greatest mistake was in his manifestation of jealousy against 
Mr. Blaine. If he had magnanimously left the field clear for 
Mr. Blaine's candidacy, that most popular man in the Republi- 
can party, as well as the favorite of many of the Democrats, 
would probably have defeated Mr. Cleveland. That foolish, 
alliterative phrase of Burchard's, "Rum, Romanism, and Rebel- 
lion/' which materially contributed to Blaine's defeat in 1884, 
had no weight with voters on second thoughts and mature re- 
flection. Mr. Blaine in 1892 was probably, after all, the most 
popular man in the country, both with the industrial element 
and with the manufacturers, who constitute the backbone of 
the nation, and his plans for protection and reciprocity might 
have brought permanent prosperity to the United States. It is 
my opinion that he would have made a successful run, despite 
the popularity of his vigorous opponent. 

This, however, was not to be, and the people, reflecting on 
the circumstances above narrated, naturally favored Grover 
Cleveland for a second term, believing that the same desire to 
guard the welfare of the country and promote its prosperity 
which marked his first term would still govern him, and that 
the same line of policy as had been exhibited in his best acts 
during the first term would actuate all his movements during 
the second. Minor delinquencies, such as Civil Service neglect, 
were forgotten or forgiven. In fact they faded out in the light 
of the superiority which he had manifested as a financier. 

The surprise was astounding, therefore, when Mr. Cleveland 



CLEVELAND'S SECOND ADMINISTRATION. 109 

sprang upon the people the object lesson which brought about 
panic Number One. He acted on the principle that the best 
way to get a bad law repealed is to enforce its execution. Mr. 
Cleveland's strange and incomprehensible excuse for teaching 
this object lesson was that suffering among the people was abso- 
lutely necessary to cause them to bring sufficient pressure upon 
their representatives in Congress to impel the latter to vote for 
the repeal of the purchasing clause of the Sherman Silver 
Law of 1890, and this clause was repealed in November, 1893, 
during the extra session that had been called for that purpose. 
To my mind, the chief error regarding this repeal was the 
inopportune time at which it was forced. The people were 
exceedingly sensitive about everything relating to the financial 
situation, and they thought all legislative interference with the 
currency foreboded panic. It is a fact well known to those 
who have been close observers of the history of finance that 
when any considerable number of people hold such views, they 
become virtual panic-makers. So it was in 1893. Mr. Cleve- 
land should have dealt with the Sherman Act immediately after 
his inauguration. He deferred his action too long. The peo- 
ple had become apprehensive at the remembrance of the recent 
Baring panic, from the effect of which they were just beginning 
to recover. The year 1892, moreover, had been in a very large 
measure prosperous, for the reason that it was the first year 
since the McKinley Bill had been passed that the law had a 
chance of exhibiting its good effects above disturbing influ- 
ences. The time therefore, I say, was very inopportune for 
the President to recommend legislation that, however good or 
innocent in itself, was likely to make people apprehensive. If 
all our people were thoughtful and reflective and could under- 
stand the nature of a law, the case would have been very differ- 
ent \ but they are not so. While the act in question repealed 
the purchasing clause, it recommended to the government to 
make every effort to establish such a system of bimetallism as 
would maintain the equal value of every dollar coined or issued 
by the United States, in the markets, and in the payment of 
debts. 



IIO THE WALL STREET POINT OF VIEW. 

I append herewith the entire section, verbatim, by which the 
idea of the intent, spirit, and purpose of the law can be more 
fully understood : — 

Act of November i, 1893. An Act to Repeal a Part of 
an Act Approved July 14, 1890, Entitled "An Act 
Directing the Purchase of Silver Bullion and the 
Issue of Treasury Notes Thereon, and for Other Pur- 
poses. 

"Be it enacted, etc., That so much of the act approved July 14, 
1890, entitled i An act directing the purchase of silver bullion and 
issue of Treasury notes thereon, and for other purposes, 1 that directs 
the Secretary of the Treasury to purchase from time to time silver 
bullion to the aggregate amount of 4,500,000 ounces, or so much 
thereof as may be offered in each month at the market price thereof, 
not exceeding one dollar for 37i T 2 oV grains of pure silver, and to 
issue in payment for such purchases Treasury notes of the United 
States, be, and the same is, hereby repealed. And it is hereby 
declared to be the policy of the United States to continue the use 
of both gold and silver as standard money, and to coin both gold 
and silver into money of equal intrinsic and unchangeable value, 
such equality to be secured through international agreement, or by 
such safeguards of legislation as will insure the maintenance of the 
parity in value of the coins of the two metals, and the equal power 
of every dollar at all times in the markets and in the payment of 
debts. And it is hereby further declared that the effort of the gov- 
ernment should be steadily directed to the establishment of such a 
safe system of bimetallism as will maintain at all times the equal 
power of every dollar coined or issued by the United States, in the 
markets and in the payment of debts." 

This " equal power" of every dollar would be lost if owners 
of silver mines could have their wealth multiplied by two by 
simple fiat of the National Legislature, and no kind of class 
legislation could be worse, as it would make gifts of millions 
to monopolists and silver trusts by the votes of the poor people 
who are loudest against trusts and monopolies. The policy of 
the free-silverites would destroy all chances of bimetallism, for 
which the act invokes the aid of foreign governments. 

After the repeal of the purchasing clause there was a run on 



CLEVELAND'S SECOND ADMINISTRATION. m 

the Treasury to exchange greenbacks for gold, and the public 
seemed to be seized with a spasmodic feeling that nothing 
in the shape of money was reliable except the yellow 
metal. 

Object lesson Number Two consisted of the agitation over 
the Wilson Bill, and its final passage in such a deformed con- 
dition, however, that its paternal relative was totally unable to 
recognize his own offspring. Mr. Cleveland obstinately refused 
to be the godfather of the baby which had been so maltreated 
by a wicked and prejudiced Senate. 

The bill had passed the House with easy success. The baby 
was a smiling cherub in the eyes of a large majority of Congress, 
and never uttered a squall until it reached the upper House, 
and the unfeeling senators began to pinch the poor thing. 
The silverites, and others in that honorable body, had the 
audacity to make 640 amendments to the bill, until it was 
like the Irishman's gun, regarding which the gunsmith said, 
when he was asked if he could mend it, that it wanted a new 
lock, stock, and barrel. 

No wonder that Mr. Cleveland exclaimed, when the ugly 
changeling was presented to him, " It is an act of perfidy and 
dishonor." We can only imagine what Professor Wilson's 
feelings must have been when he beheld the metamorphosed 
production of his fine and profound intellect. 

To say that the House was thunderstruck on the return of 
the bill, when they beheld its curious metempsychosis, would be 
putting it mildly. They soon discovered, however, it was either 
" that or nothin'," according to the Senate's mandate, and they 
mournfully accepted it. 

It is almost needless to say that Mr. Cleveland did not sign 
this deformity and he was too indignant even to veto it. He 
let it go by the constitutional ten days' default, and it became 
a law in all the horrors of its "perfidiousness." No wonder, 
therefore, that Messrs. Cleveland and Carlisle were "short" 
on government expenses and "long" on bonds to procure gold. 
If the President had exercised his veto power, it would have 
been a good thing for the country, as in that event the McKin- 



112 THE WALL STREET POINT OF VIEW. 

ley Law would have continued in existence, and we probably 
would have had better times ; but if better times had not 
ensued, the country's condition would have given the Demo- 
crats an excellent opportunity to attribute their luck to the 
McKinley Bill, instead of the Republicans being able, as things 
turned out, to set down all business troubles and calamities to 
the Wilson Bill. Mr. Cleveland's conduct in regard to the bill, 
and the weak front shown by the House in swallowing it with 
the absurd amendments, will afford, it seems to me, a barrier 
for a long period against making free trade an issue in a presi- 
dential campaign. 

Probably a new generation will have appeared on the scene, 
with little or no knowledge of, or interest in, the disasters 
of the last four Democratic years, before there can be any pos- 
sible political recovery for that party, or before free-trade doc- 
trines, as against protection for United States industries, can 
have any favorable support from the people. 

In view of the facts herein stated and the references to the 
tariff bills, it is fitting to quote some official figures regarding 
the outcome of the two bills. 

Total receipts under McKinley Law, 

October, 1 890-1 892 . . . . . . $759,456,825 

Total expenditures under McKinley Law, 

October, 1890-1892 731,211,184 

Surplus $28,245,641 

Total receipts under Wilson Law, 

September, 1894, to December, 1895 .... $373,790,648 
Total expenditures under Wilson Law, 

September, 1894, to December, 1895 .... 444,290,692 

Deficiency $70,500,044 

The total deficiency in meeting government expenses up 
to November, 1895, exceeded $130,000,000. 

If the Wilson Bill had passed the Senate as it left the House 
of Representatives, the deficiency in the revenue would have 
been still larger than it was in December, 1895 ; so the Admin- 



CLEVELAND'S SECOND ADMINISTRATION. 113 

istiation should have been glad that the Senate disfigured the 
bill. The Wilson Law, moreover, caused the first deficiency 
that had occurred in the revenue since the close of the Civil 
War. Every year, from that time up to 1893, there had 
been a surplus and a consequent reduction of the national 
debt. 



CHAPTER XVI. 

EX-PRESIDENT CLEVELAND PERSONALLY CONSIDERED. 

The theory of his potent personality and an attempt to reveal the secret 
of his success through this mysterious power and other potentialities. — 
Striking a balance between his praiseworthy acts and some of his mis- 
takes. — How he is likely to be rated by the future historian and biog- 
rapher. — His name stamped indelibly on the politics of his own times. 
— His unflinching advocacy of sound money. — He drew all shades of 
politics after him and was independent of party. — Why he drew so 
many heterogeneous elements. — Comparison with Macaulay's Machia- 
velli. — His prompt and popular action in suppressing the Chicago riots 
and causing the overthrow of Eugene V. Debs. — His advice to the 
Democratic party. 

IF anybody should happen to draw the inference, from the 
strictures I have made elsewhere on the errors and short- 
comings of ex-President Cleveland, that he was not possessed 
of several elements of greatness, it would be a grave error in 
judgment on the part of the reader. 

Mr. Cleveland has shown himself to be a great and remarka- 
ble man in many respects, and this will in all probability be the 
estimate of posterity. 

My chief reason for this belief is that the man's potent per- 
sonality in a few things that were highly important has stamped 
itself indelibly on the politics of his own times. For instance, 
he stood up for sound money, and was one of the strongest 
advocates of the cause against the clamor for free-silver coin- 
age, which at one time came near carrying with it a majority. 
Of course the victory would have been only temporary, if such 
general dementia had seized the people at large, because the 
sober second thought of the thinking minority would have 
triumphed eventually after the country had perhaps passed 
through the ordeal of a panic worse than all former panics con- 

114 



EX-PRESIDENT CLEVELAND CONSIDERED. 115 

densed into one. From a calamity of this character Mr. Cleve- 
land was one of the most potent agencies in saving us. He 
was unflinching in his courage in the maintenance of the gold 
standard, and in all probability his influence and his powerful 
attacks on the free-silver heresy made almost as many votes 
for McKinley as Mark Hanna did ; and this in spite of Mr. 
Cleveland's deep-seated aversion to Mr. McKinley's pet theory 
of protection for our industries. 

Cleveland has been very popular at intervals during both 
terms of his administration, and the secret of his popularity 
has been rather a mystery to both friends and foes. 

The supreme test of the popularity of a President and an 
administration is whether during the greater part of the period 
of power the country has been prosperous. Beyond this test 
the public are no more inclined to listen to excuses or apolo- 
gies than they are in the case of a general who has been 
vanquished in a series of battles by the enemy. That charity 
which is said to cover a multitude of sins is rarely, if ever, 
exercised in instances like these. 

When Mr. Cleveland took possession of the White House, 
March 4, 1893, the country was prosperous. When he went 
out of office, March 4, 1897, the country was almost on the 
verge of bankruptcy, and the worst prolonged depression in 
business that the nation has ever experienced prevailed during 
the greater part of the time. Had it not been for the agitation 
regarding free-trade theories, together with certain other Uto- 
pian schemes of reform, the good times which the country 
enjoyed during the last year of General Harrison's administra- 
tion would in all probability have been continued indefinitely. 

Now it seems to be the popular belief that when Mr. Cleve- 
land ran for President in 1892, after having been defeated by 
General Harrison in 1888, he was the candidate of the Demo- 
cratic party. He was nominally and officially so, it would 
appear, but he was besides a popular candidate, and did not 
seem to own allegiance to any party. His aim from the first 
was to catch the popular ear and to make the impression deep 
in the hearts of the people that he was their candidate irrespec- 



Il6 THE WALL STREET POINT OF VIEW. 

tive of party. That portion of his devotion which pertained to 
party he seemed to regard only as a matter of form, a kind of 
principle of politeness, with the formality of which political 
society expected compliance as mere pantomime, without put- 
ting any soul into it or having any conscientious sensations 
about it. Both his letters of acceptance and his speech on 
taking the oath of office bear out his theory, and it was the 
perception by the people of this feeling on his part that in 
large measure drew to him so many heterogeneous elements 
and gave him such a large majority over President Harrison. 

He drew from all shades of politics and factions to swell his 
immense majority, from the Populists and protectionists as 
well as from the free-traders, and herein is revealed a part of 
the mystery. Careful investigation by expert politicians and 
journalists after the election showed the fact that even pro- 
tectionists voted for him, without being able to assign a reason 
other than that they wanted a change and desired to experi- 
ment. Farmers and others said so, while admitting that they 
had enjoyed greater prosperity during the two former years 
of the operation of the McKinley tariff than ever before. 
Such instances as these only tend to deepen the mystery, and 
throw us back to the reflection that Mr. Cleveland, amid the 
discussion of a great variety of topics, never ceased to vibrate 
one chord wherever he had the opportunity, namely, that he 
was the representative of the people, always their obedient 
servant and ready to do their will and perform their behests at 
all times. Whatever derelictions there might be from these 
professions, they did not seem to count with the multitude 
either before or after the election, at least for the first year of 
his second term. 

There could be no stronger proof of great personality, and 
that certain hypnotic potencies are largely developed in Mr. 
Cleveland. It is a proof of the attributes of generalship. 
Nothing drew the soldiers of Napoleon closer to him than a 
temporary defeat. This was true in every instance until Water- 
loo, and notably so after Moscow. Mr. Cleveland will have no 
chance of experimenting on a Moscow or a Waterloo. He re- 



EX-PRESIDENT CLEVELAND CONSIDERED. 117 

tired peacefully and in good order, not to a St. Helena, but to 
a Fontainebleau at Princeton, New Jersey, where he entered 
into the full enjoyment of domestic happiness. 

Mr. Cleveland may employ some of his leisure hours in 
writing the inside history of his administration, but it is 
questionable if he himself can satisfactorily explain the many- 
sided traits of character which he displayed during the period 
of his toilsome and arduous experience in Washington. Ma- 
caulay in his review of Machiavelli says : — 

"Two characters altogether dissimilar are united in him. They 
are not merely joined, but interwoven. They are the warp and woof 
of his mind, and their combination, like that of the variegated threads 
in shot silk, gives to the whole texture a glancing and ever changing 
appearance. The explanation might have been easy if he had been 
a very weak or very affected man. But he was evidently neither the 
one nor the other. His works prove, beyond all contradiction, that 
his understanding was strong, his taste pure, and his sense of the 
ridiculous exquisitely keen." 

Now, this is very high praise from the great English essayist, 
critic, and historian, bestowed upon a man who has been uni- 
versally execrated on account of his politics and diplomacy ; 
and it is curious how closely this particular characterization will 
apply to Mr. Cleveland, unlike the wily Italian as the downright 
and honest " Grover " is. Concerning one point of the com- 
parison, however, — the last clause, " his sense of the ridiculous 
exquisitely keen," — I am in doubt. If it were on record that 
Mr. Cleveland had laughed heartily when the Wilson Bill was 
sent to him with the Senate amendments, then this fragment 
of Macaulay's description of the great Florentine statesman 
might apply with some modifications to him. He appears to 
have been many-sided, yet without much inconsistency, para- 
doxical as it may seem ; and possibly the multi-sided aspect of 
the man may have been more in appearance than in reality. 
It may have been the reflection of others, but, like St. Paul, he 
appeared at times to be " all things to all men." This was 
doubtless the effect of reflex action. Several political parties 



Il8 THE WALL STREET POINT OF VIEW. 

and factions, holding diverse opinions, each seemed to consider 
him as the one man who could best represent them. Hence 
we perceive one secret of his large majority. He proclaimed 
himself the candidate of the people, and the large majority took 
him at his word, regarding as minor matters in their political 
faith what formerly had been considered of the first impor- 
tance. 

The support which the bankers gave to Mr. Cleveland illus- 
trates how men took him at his personal word. Although he 
accepted the Democratic platform in its entirety, yet the bankers 
connected with the national banking system gave him a hearty 
support, despite the fact that he was bound to favor, so far as 
executive favor can go, the plank in the platform which recom- 
mended the abolition of the ten per cent, tax on the state banks, 
a step which, in all probability, would have exercised a demoral- 
izing influence on our whole currency system. Yet the bankers 
seemed to overlook this very important point, in view of the 
fact that he was sound on the question of the gold basis. To 
that all other considerations were secondary. Again, high 
tariff men who had hitherto seemed to pin their faith on Major 
McKinley's sleeve with the enthusiasm of Mussulman devotees 
to Mahomet, voted for Mr. Cleveland in spite of the fact that 
he denounced the tariff laws as " the vicious, inequitable, and 
illogical source of unnecessary taxation." Even Populists, 
anarchists, and socialists gathered to his standard, notwithstand- 
ing his well-known antipathy to all enemies of a firmly estab- 
lished government by the will of the people on a conservative 
and permanent basis. 

The attraction of such diverse elements can be accounted 
for only by the strength of his personality, and by the addi- 
tional fact that there must have been something in him which 
inspired confidence. 

When he saw his way clearly he was usually prompt i,n 
action, though some of his unaccountable delays were irritating 
to the people as well as injurious to public prosperity. His 
remarkable quality of promptitude in action was manifested in 
a very laudable manner in the suppression of the railroad riots 



EX-PRESIDENT CLEVELAND CONSIDERED. i ig 

at Chicago. The country was then on the brink of a revolu- 
tion. Governor Altgeld of Illinois did not show any inclina- 
tion to suppress the riots. Adhering closely and technically to 
the language of the Constitution, he did not see the necessity 
of calling on the United States troops until the forces within 
the State at his disposal were proved unequal to the task, and 
he had apparently no desire even to utilize those forces. In 
fact, he appeared to be rather pleased with the uprising against 
the capitalists, the movement being in accordance with his 
views on national politics, and the rule of the rabble appear- 
ing to him as the proper means of establishing a paternal gov- 
ernment. 

In this extremity General Schofield, observing with the keen 
eye of a practical leader in an emergency, that the passions 
already engendered in the mob were gathering strength and 
ferocity every hour, concluded that the incipient insurrection 
might soon be fanned into a revolutionary flame and extend all 
over the Union. In fact, it appeared as if the country might 
be threatened with something as direful as another civil war. 
He therefore lost no time in consulting the Attorney- General, 
Mr. Olney, to find out if there were no means of quelling the 
riot by Federal authority without depending on Governor 
Altgeld. Mr. Olney soon discovered that the case involving 
the Chicago riots was not confined to the State of Illinois, but 
was an interstate affair of national concern, and that the Fed- 
eral government had the right to interfere with the train- 
wreckers for the purpose of protecting the United States mails. 
Thus the ostensible plea of Governor Altgeld was set aside, and 
the United States authorities held the fort. President Cleve- 
land, as commander-in-chief of the army, promptly gave 
orders that Federal troops should be sent to Chicago for the 
purpose of reducing to order and decent behavior all riotous 
persons who should attempt to wreck railroad cars containing 
United States mail. The troops came and conquered, with- 
out the shedding of much blood, and the revolution was nipped 
in the bud. The labor unions all over the country, restless, and 
tempted to a simultaneous rising by Eugene V. Debs, were 



120 THE WALL STREET POINT OF VIEW. 

quieted by this display of force, and since then there has 
been no serious show of hostility against capital. 

Had it not been for Mr. Cleveland's promptness on that oc- 
casion, it is hard to say how the trouble might have ended. If 
he had been a man of weak and vacillating purpose, the forces 
of disorder would doubtless have made rapid headway while he 
was coming to a decision ; but the emergency in question shows 
that he has a well-balanced mind, that he is quick to apprehend 
combinations of circumstances, real, probable, and possible, has 
the judgment and comprehension to devise plans to meet them, 
and the courage to execute the plans without hesitating or 
wavering. 

These are a few of the qualities of a great general, but not 
all. The statesman and the general are seldom united in the 
same person, except in military geniuses, like Caesar, Scipio, 
Marcus Aurelius, Justinian, Napoleon, and a few others. A 
large number of generals aspire to be considered statesmen of 
the highest type, but they are generally failures, like the Duke 
of Wellington, for instance. 

In statesmanship, it must be candidly confessed, Mr. Cleve- 
land was not as sagacious as some of the great occasions 
required. Yet some of his mistakes can probably be laid to 
the charge of these very attributes of generalship, one of which 
is to assail the enemy at every weak point and on every favor- 
able opportunity, to be constantly on the lookout for defects in 
his armor, and to strike vigorously at those defects. Now the 
very thing that may be considered bravery of the highest type 
in a military officer may also be regarded as indiscretion in a 
statesman. The Venezuela panic message, for instance, mixed 
the expressions of a statesman with the brusqueness of a gen- 
eral of the army. If it had been carefully edited by a calm 
statesman, it would have been much better both for the personal 
comfort of the author and for the business interests of the 
country. 

But Mr. Cleveland might not have permitted anybody to draw 
the blue pencil through the last paragraph of that message, in 
which the chief source of trouble lay. It is probable that Mr. 



EX-PRESIDENT CLEVELAND CONSIDERED. 121 

Olney did propose to do so, but was checked in the attempt. 
Mr. Cleveland has always been decidedly averse to relinquish- 
ing his individuality, and its bold assertion, more in action than 
words, perhaps, is one of the secrets of his success in bearing 
down opposition and succeeding against the onslaughts both of 
friends and enemies. Take the case of Tammany, for instance, 
in Cleveland's last campaign. This solid organization imagined 
that it held New York as in a safe for which nobody but the 
"boss" had the combination, and the state committee of 
seventy-two had instructions from that mighty mogul to arrange 
matters politically so that Mr. Cleveland would be excluded 
from the White House. Bourke Cockran, moreover, the official 
orator of Tammany, who has since done "works meet for re- 
pentance," denounced the man of destiny, bringing all the tricks 
of the orator most effective and telling with the average audi- 
ence, to aid his purpose. Vituperation in its various forms was 
directed against the popular candidate, and satire, cynicism, 
and irony were hurled in reckless profusion at him. " Grover 
Cleveland," said the silver-tongued orator in a tone of wither- 
ing sarcasm, " is the most popular man in the country every day 
in the year, except election day." This hit drew roaring ap- 
plause, but it proved a terrible boomerang to Cockran on the 
8th of November following that applause. 

I have referred to Mr. Cleveland's habit, in whatever he said 
or wrote, of keeping in prominence the idea that the people 
were the first object of consideration, and that parties and their 
machines should be relegated to a secondary position or totally 
ignored. His method in this respect was pretty well illustrated 
in a speech at the Manhattan Club, a short time after his last 
election, a speech which also reveals what he himself considered 
largely as the secret of his success. He said : — 

" The American people have become politically more thoughtful 
and more watchful than they were ten years ago. They are con- 
sidering now, vastly more than they were then, political principles 
and party policies, in distinction from party manipulation and the 
distribution of rewards for partisan services and activities. In the 
present mood of the people neither the Democratic party nor any 



122 THE WALL STREET POINT OF VIEW. 

Other party can gain and keep the support of the majority of our 
voters by merely promising or distributing persona] spoils and favors 
from partisan supremacy. They are thinking of principles and 
policies, and they will be satisfied with nothing short of the utmost 
good faith in the redemption of the pledges to serve them in their 
collective capacity by the inauguration of wise policies and giving to 
them honest government. I would not have this otherwise, for I 
am willing that the Democratic party shall see that its only hope of 
successfully meeting the situation is by being absolutely and patrioti- 
cally true to itself and its profession. This is a sure guaranty of 
success, and I know of no other." 

The last words of this sapient advice naturally recall the 
language of Shakespeare in the mouth of old Polonius in that 
famous advice to his son, who was just going out into the world : 

" This above all, — to thine own self be true ; 
And it must follow, as the night the day, 
Thou canst not then be false to any man." 



CHAPTER XVII. 

THE SIGNIFICANCE OF THE WILSON TARIFF LAW. 

Intended to wipe out every vestige of Republican tariff legislation. — How 
the law has proved a boomerang and deprived the Democrats of a 
return to power for a long period. — How men accustomed only to 
little places and little interests cannot be expected to deal with great 
matters. 

THE special purpose of the Wilson Bill was to wipe out 
every enduring vestige in tariff legislation of the Repub- 
lican party. That party had been in power for thirty-two years, 
and now that the Democrats had got into office for the first 
time since the war, they were anxious to make a record all 
their own, with a view of installing themselves for a long period, 
as the Republicans had done. The party was greatly elated. 
It determined to make a clean sweep of the country, and to 
that end it was necessary to come before the people with a 
popular issue ; but the popularity of the issue chosen proved 
delusive. The issue was free trade thinly disguised under the 
cloak of " tariff for revenue only " ; and as soon as the Demo- 
cratic party began to doctor the tariff, want of confidence in 
the wisdom of the Administration began to make itself mani- 
fest, and this feeling increased as the presumable reform in 
tariff went on. The people did not want it, never did want it 
in this country, and never will want it in its entirety, although 
we will naturally, as we become permanently a large creditor 
nation, gravitate nearer and nearer to it. 

The Wilson Tariff Law may prove a blessing in disguise, 
however, as it has effectually barred the Democratic party 
from raising the free-trade issue again for many years. Of 
course it has been a very expensive experiment for the country, 

123 



124 THE WALL STREET POINT OF VIEW. 

having cost it, in panics, hundreds of millions of dollars, per- 
haps ; but the history of the experiment will stand in our 
annals as a solemn warning to voters for all time to let free- 
trade theories alone if they want to see the country prosperous. 

Pursuing their belligerent method of reasoning, then, the 
first aim of the Democrats was to get the McKinley Law out 
of the way. Major McKinley had been a conspicuous leader 
in the Republican party, and the law that bore his name 
was a popular measure and one calculated to bring prosperity 
in its wake, as was abundantly proved by results, until free- 
trade agitation blocked the path of prosperity. It would 
never do, reasoned the free-traders, to let any part of that 
law remain on the statute book as a menace to the towering 
ambition of Democrats and their ideas of sweeping reforms. 
It would spoil the Democratic issue, and throw discredit on 
that bait of cheap clothing offered to voters who would have 
no money to buy it under a free- trade regime. It was resolved, 
therefore, that free trade in the disguise of " tariff for revenue 
only" would prove an effective scheme to capture voters. 

The eventual election of Major McKinley, however, was a 
sad blow to this fondly cherished hope. Instead of the Wilson 
Law being instrumental in consigning the name of McKinley 
to oblivion, as had been intended, it has been one of the chief 
instruments in making him a more marked personage than 
ever, and has helped materially to give him a chance of mak- 
ing a world-wide and durable reputation among the political 
benefactors of his day and generation. 

As the Wilson Law was calculated to take away from the 
wage earner a considerable portion of what he had been accus- 
tomed to earn, in many instances from one third to one half, 
besides throwing hundreds of thousands out of employment, it 
did not matter to him whether the price of a coat was two, five, 
or ten dollars. He could get no money to buy it at any price. 
So that argument was soon demonstrated to be a cruel mockery 
to the wage earner, however plausible or conclusive it might 
seem from a theoretical and professional point of view. 

It was no wonder that Mr. Cleveland was highly incensed 



SIGNIFICANCE OF WILSON TARIFF LAW. 125 

when he discovered that an obstinate Senate had altered that 
solemn production, which he had regarded as a sort of new 
Declaration of Independence, into a kind of serio-comic farce, 
and that the document, when presented to the President and 
compared with the original, afforded a fine illustration of the 
Napoleonic maxim, " it is but one step from the sublime to the 
ridiculous," — the step on that occasion being from the House 
of Representatives to the maliciously humorous Senate. 

Nevertheless, those 640 amendments inserted by the Senate, 
though they were loudly denounced at the time by the free- 
trade party as ruinous to the beneficent purposes of the bill 
as originally designed, turned out to be an unexpected blessing 
to the country. The Senate is entitled to the praise and ad- 
miration of the whole people on account of its masterly mutila- 
tion of that bill, for if the measure had passed in the shape 
that it left the House, it would have been fraught with even 
more financial mischief. The feeling of distrust and worry in- 
flicted on the seventy million inhabitants of this country would 
have made them appear so careworn and broken down in health 
and spirit, as well as in pocket, that people who had not seen 
each other for several years would have found as much diffi- 
culty in mutual recognition, as Professor Wilson experienced 
in the identification of his own political progeny after the 640 
amendments had been attached thereto. 

But seriously, this, like many other fiascos, goes to show that 
if legislators want to be able to judge aright in national finan- 
cial affairs, if they aim at broad-gauge legislation and wish to 
shed the shell inseparable from their existence in village com- 
munities, they must go to headquarters occasionally, and that 
is New York City. If they want to exercise clear judgment in 
regard to business, as commingled with their legislative functions 
and purposes in the interest of the whole people and in touch 
with the country at large, they must become imbued, verily 
saturated, with cosmopolitan ideas. After working themselves 
for a time into the belief — as by this faith they shall be saved 
— that financially at least New York is virtually the United 
States, in the same sense that London is England, and Paris is 



126 THE WALL STREET POINT OF VIEW. 

France, they should return home and reflect studiously on their 
experience. 

When this supposable trip to the metropolis is over, and a 
day or two of reflection is indulged in regarding the journey 
thus enjoyed, the eyes of the traveler will gradually open, 
and he will begin to wonder why he has been trifling his 
time away around his native town for half a lifetime with his 
eyes half shut. His ears also will have passed through a course 
of similar development, and his whole intellectual capacity will 
be endowed with vastly improved powers of absorption, recep- 
tion, and retention. For the first week or so he will look upon 
his fellow townsmen with a feeling similar to that with which 
Captain Lemuel Gulliver regarded the Lilliputians, according 
to the account given by Dean Swift of that remarkable nation 
of midgets ; and after going through this preliminary process, 
the legislator will find himself much more capable of legislat- 
ing in the interests of finance and business, and the measures 
which he may introduce or influence by his speeches and advice 
in committee, or on the floor, will take on a more statesmanlike 
character than those that he had assisted in passing prior to his 
metropolitan experience. 

Moreover, he will become a missionary and make converts 
by the dozen of the stay-at-homes. He will have discovered 
that a month's travel is worth a year's reading, or a college or 
office education, for all the practical purposes of mental evolu- 
tion ; and as soon as he gets through the next session he will 
come again and probably bring a few of his friends with him. 
He may finally settle down here and become a millionaire. 
There is no romancing about this ; I can quote historical and 
biographical examples within my own personal experience for 
the probabilities and possibilities which I am now considering. 

People who have been born in small towns and interior 
places, and leave those haunts of boyhood in early youth, may 
return to them for social reminiscences or to renew the feelings 
of family ties, but they never go back there to get any infor- 
mation or knowledge to guide them as lawyers, statesmen, or 
financiers. The information which they must seek is not there 



SIGNIFICANCE OF WILSON TARIFF LAW. 127 

to be obtained. We never read of Daniel Webster, for in- 
stance, going back to Salisbury in New Hampshire to post 
himself for any of his great speeches ; nor do we ever hear of 
Henry Clay having gone to Ashland, near Lexington, Kentucky, 
for that purpose ; nor of John C. Calhoun returning to South 
Carolina. 

The metropolitan community, for these and many other 
reasons, is the great center of attraction. It draws within its 
irresistible influence people from all parts of the globe, as the 
loadstone mountain was said to have drawn Mahomet in his 
coffin. But, unlike the case of Mahomet, the metropolis draws 
the people while they are very much alive, and the more vigor- 
ous they are the more easily it draws them. 

It is not from the best of libraries that people learn most 
in the metropolis. It is from the actual contact with such a 
large variety of people of many minds and opinions, and of 
many nations, that are constantly to be met there. This 
has a quickening effect on the perceptive faculties that men 
who pass their existence in small towns never experience. 
"Iron sharpeneth iron," says Solomon; " so a man sharpeneth 
the countenance of his friend." There is, perhaps, no place 
where this shrewd observation of the wise king of Israel is more 
vividly realized than in Wall Street. 

Some men attempt to ignore this educational power and civ- 
ilizing influence of large cities, but had it prevailed in the last 
Democratic Congress, there would have been, in truth, no Wil- 
son Bill to menace our prosperity, no paralyzing amendments, 
and no regrets and sorrows and heartburns over what was and 
what could never be. 



CHAPTER XVIII. 

A BATCH OF LEGACIES. 

Devised and bequeathed to the Republican party by the last will and tes- 
tament of the last Democratic Congress. — The unfinished business of 
eight years of hard and anxious work in the White House. — Lincoln's 
views on the Constitution and the tariff. 

THERE never has been another such large batch of lega- 
cies left by any retiring political party in the United 
States since the origin of the Republic as that devised by the 
Democratic party to its successors in office. 

Not one of the various reforms which the President intro- 
duced and had toiled over many a day and night during eight 
years was satisfactorily consummated. All were left in such an 
inchoate condition that we might aptly refer to them as " unfin- 
ished business." If that archaic prejudice which stands in the 
way of a President's enjoying a third term did not exist, perhaps 
Mr. Cleveland might have been afforded an opportunity of see- 
ing the fruits of his anxious thoughts and arduous labors, and the 
country might have been made permanently prosperous and 
happy by the result. Republics are proverbially ungrateful, 
however, and Mr. Cleveland found this to be true. Perhaps 
the numerous cautions and the sound advice which he has been 
in the habit of giving the Democratic party may bear fruit 
when that party gets into power again, and his reforms may be 
prosecuted, but probably not with the same vigor and enthu- 
siasm with which they were begun. Future generations may 
produce men of as great vim and self-confidence as Mr. Cleve- 
land, but it is doubtful. 

Chief among the legacies, that of the tariff has been already 
dealt with by the McKinley administration, and the deficit in 

128 



A BATCH OF LEGACIES. 1 29 

the revenue, which was a source of so much trouble to the 
Democrats, has been changed into a surplus. 

It may not be out of place to note here that England and 
English manufacturers were even more disappointed than Mr. 
Cleveland that he was not chosen for a third term. He is one 
of the most popular Americans in Great Britain. Yes, many of 
the English regard Mr. Cleveland as a second Washington, 
despite the matter of the Venezuela boundary, thus proving 
that the bread-and-butter question appeals more strongly to 
the human heart with many people than does any feeling of 
patriotism. Free trade with this country would be one of the 
greatest instrumentalities possible for enriching England at our 
expense. It would make of us a semi-philanthropic treasury 
from which England could draw largely as long as we should 
be able to avert national bankruptcy. When this crisis should 
arrive, England might send over a receiver, wind the thing up, 
and establish most of her manufactures on this soil. This 
would have the merit of being a bloodless victory for the auto- 
crats of cheap labor. 

Of the other half dozen or so of reforms projected by Mr. 
Cleveland, none but the repeal of the purchasing clause of the 
Sherman Silver Law came to any definite result, and that, as 
I have shown elsewhere, was so ill-timed and otherwise mis- 
managed that it caused a disastrous panic. The abortive at- 
tempts made at these reforms were a fruitful auxiliary cause of 
our financial ills during the four years prior to Mr. McKinley's 
election. 

With regard to Mr. Cleveland's personal interference in 
originating legislation, as in the case of the Sherman Bill, he 
seems to have disregarded two of his own maxims, namely, 
" Public office is a public trust," and "The duty of a President 
is simply executive." As I have formerly remarked, the rule 
of action as laid down in the Constitution regarding the extent 
to which the President may go in giving Congress " information 
of the state of the Union," and in " recommending for its con- 
sideration such measures as he shall judge necessary and expe- 
dient," may give rise to some nice distinctions, as may also the 

K 



130 THE WALL STREET POINT OF VIEW. 

further power accorded to him by the same instrument " to con- 
vene both Houses or either of them on extraordinary occasions. " 
These points have been subjects of considerable comment by 
jurists, politicians, and statesmen ; but Abraham Lincoln, in one 
of his short, pithy, common-sense analyses, has probably thrown 
more light on the subject than the majority of those who have 
attempted it. Mr. Lincoln, referring to this provision in the 
Constitution (Article II., 3, 1) and also to the tariff question, 
says : — 

"By the Constitution, the Executive may recommend measures 
which he may think proper, and he may veto those which he thinks 
improper, and it is supposed that he may add to these certain indi- 
rect influences to affect the action of Congress. My political educa- 
tion strongly inclines me against a free use of any of these means by 
the Executive to control the legislation of the country. As a rule, I 
think it better that Congress should originate as well as perfect its 
measures without external bias. I therefore would rather recommend 
to every gentleman who knows that he is to be a member of the next 
Congress, to take an enlarged view and post himself thoroughly, so 
as to contribute his part to such an adjustment of the tariff as shall 
produce a sufficient revenue, and in its other bearings, so far as pos- 
sible, be just and equal to all sections of the country and classes of 
the people." 

If this wise advice of the martyr President had been always 
taken by his successors, what a boon it would have con- 
ferred on the country ! But it was not consonant with the dis- 
position or cultivated habits of our late Executive to pay much 
heed to advice, either of ancient sages or modern legislators. 
When a legislator or expert financier, thinking he had a good 
thing to communicate to the presumable fountain of legislative 
wisdom, would call at the White House, President Cleveland 
would receive him cordially, listen to his statement, and then 
make a brief reply, at the conclusion of which he would men- 
tally move the previous question, cutting off all debate while he 
preserved an attitude of politeness toward his visitor, who in 
most instances soon grew weary of the one-sided conversa- 
tion, and was gracefully bowed out by the secretary, who 



A BATCH OF LEGACIES. 131 

doubtless congratulated his chief that another "crank" had 
been summarily disposed of. 

The attempt to run the government on theories, as sub- 
stitutes for practical measures, proved, and always will prove, 
a signal failure. Hence the people thought that it was safer to 
return to the old practical method that had worked so well, 
generally, for thirty-two years. 

One of the remarkable features of the attempted legis- 
lation of the late Democratic administration was the ill-con- 
sidered and crude character of the greater number of the 
measures formulated. They showed evidence of being men- 
tally undigested, and exhibited a deficiency in breadth of view 
and comprehensiveness. Take, for example, the Income Tax 
Bill, which was killed by the United States Supreme Court. 
That measure provided for throwing more than half the burden 
on the State of New York, and pretty nearly all that half on 
New York City. This was pleasing enough to the Southern 
and Northwestern people, and of course made the bill very 
popular in those sections. 

Such crudeness and narrowness appeared in many legislative 
measures during the last Democratic administration. It was 
so with the currency question, and also when the administra- 
tion essayed to settle international complications by applying 
to these the ordinary methods of running party politics. The 
idea of the fitness of things seemed frequently lost sight of, 
and often discord instead of harmony ruled in administration 
affairs. 



CHAPTER XIX. 

TARIFF FOR PROSPERITY ONLY. 

The invaders of our home markets repulsed. — Foreign manufacturers and 
the products of their pauper labor not in demand. — Definitions of 
revenue tariff and protective tariff. — The latter fairly provided for in 
the Dingley Bill, and wool restored to the farmers. — Home markets 
in preference to foreign. — How McKinley humorously caught the 
clothier member for Boston on the cheap clothing argument. — Home 
capital and home labor will get a chance for development, and the 
time of prosperity has come. — Practical outcome of the protection 
and free- trade doctrines considered. — The testimony on this subject of 
two eminent witnesses, James Buchanan and Grover Cleveland. 

THE most important measure of a Republican Congress was 
the Tariff Bill. This, despite the strongest possible free- 
trade opposition, was passed almost on the lines of the former 
McKinley Bill, which during the brief period of its existence 
gave such bright promise of permanent prosperity. 

The salutary effect of the late tariff legislation has been 
demonstrated most conspicuously in the unparalleled showing 
of our foreign trade, which I shall review in the following chap- 
ter. Another good result of the tariff law is that a sufficient 
revenue, if economically administered, seems to be assured to 
the government, and that " endless chain," which had a con- 
stant tendency to deplete the treasury gold reserve, and which 
gave such trouble to the last Democratic administration, has 
vanished. The Treasury at the end of the fiscal year had a 
gold surplus of $188,000,000; the largest, I believe, during the 
past eight years. 

There can be no doubt about the legitimacy and propriety 
of this taxation, for the Constitution of the United States says 
in the Eighth Section of the First Article : " Congress shall 

132 



TARIFF FOR PROSPERITY ONLY. 133 

have power to lay and collect taxes, duties, imposts, and ex- 
cises to pay the debts and provide for the common defense 
and general welfare of the United States . . . also to regulate 
commerce with foreign nations." This authority, being the 
highest law of the land, places the power of Congress to " col- 
lect taxes, duties, and imposts " beyond doubt. 

The question may then arise : If Congress has power to 
impose taxes other than those for " revenue only," has the law- 
making machinery the power to lay taxes, through tariff laws, 
for the protection of American industries and labor? Most 
decidedly it has, for it is expressly stated in the section quoted 
that these taxes are to " provide for the common defense and 
general welfare of the United States." There is no provision 
for defense more urgently required than that against the inva- 
sion of the needy manufacturers of Europe, with their pauper- 
labor goods and merchandise, for the purpose of capturing our 
markets, breaking up our manufactories, and reducing our 
great army of artisans and laborers to their own status. 

If the free-trade party in this country should get the upper 
hand, the invasion suggested would be worse than that of the 
Goths, Huns, and Vandals who overran western Europe and 
eventually brought about the fall of the Roman Empire. 

If anybody should consider this opinion as to the possible 
invasion exaggerated, I should simply give him an object lesson 
in geography. Europe has an army, most of it hungry and 
desperate, of 312,000,000 to be drawn upon for the purpose 
of that invasion, with the forces of Asia, more hungry still, con- 
sisting of a reserve of 800,000,000. If 100,000,000 of the 
latter were imported — a number that would hardly be missed 
— Americans would have a hard time of it, and this, or some- 
thing like it, is the inevitable prospect if ever the free-traders 
should get a chance of running this country on the lines indi- 
cated in the original Wilson Tariff Bill. If these immigrants 
did not appear here in physical form, the fruits of their labor 
would, and that would be worse. 

This contingency, I think, however, is now remote. The 
people have had a rude awakening from the soft lethargy into 



134 THE WALL STREET POINT OF VIEW. 

which they had been lulled by those who promised to lead 
them to the Elysian fields of permanent prosperity, where, by 
virtue of European cheap clothing and a list of luxuries put 
before their hungry gaze (which they had no money to buy), 
they might pass the remainder of their days in rest, quietude, 
and happiness. That dream has passed away, I hope forever ; 
and the people are able to look back and perceive how they 
were misled and cajoled out of their votes to create a con- 
dition of things that had brought the country, but for its 
wonderful internal strength and unlimited resources, to the 
very verge of bankruptcy. Four years more of that regime 
would probably have left the reserve corps of the invaders very 
little except land to plunder on their arrival. The free-trade 
leaders, with their foreign myrmidons, seemed determined on 
making a clean sweep of everything available, and bringing ruin 
upon all that the protective system had been instrumental in 
building up since the close of the war. 

True, their late chief has not relinquished hope nor ceased 
trying to inspire the small remnant of his adherents to maintain 
the fight in the future. He left office exhorting his followers 
to " continue the struggle" against "mad protection," to " chal- 
lenge boldly to open warfare the enemies of free trade, and 
guard against treachery and half-heartedness in the camp." 
This was the language which he had used a few years before 
to Mr. Catchings, a Congressional friend of his, and these were 
the sentiments with which he still seemed to be inspired on 
his departure from the White House, despite the signal defeat 
of all the factions by whom he had been elected. 

His former forces, however, met their defeat in November, 
1896, and the McKinley administration, despite the war with 
Spain in the meantime, has brought prosperity to the nation, as 
shown in the unprecedented balance of trade in our favor. On 
the subject of this balance of trade, as exhibited in the report 
of the Bureau of Statistics, a separate chapter will show the 
prosperous results of the recent tariff law as opposed to the 
free-trade idea. 

The subject of tariff taxes, or duties, divides itself into two 



TARIFF FOR PROSPERITY ONLY. 135 

parts. One is a tariff for revenue only, and the other is a 
tariff for both revenue and the protection of labor and native 
industries. Failure to recognize this distinction has led to grave 
and numerous errors, one of which is that all articles, both 
home and foreign, which are on the tariff list, cost consumers 
the price of the article as estimated by the manufacturer or 
producer, to which is added the amount of the tariff. This 
seems at first sight to be very plausible reasoning, but it is 
quite erroneous, applying only to the foreign productions which 
are not also produced on this side, or not in sufficient quantity 
to supply demand. The consumer " pays the freight " in that 
case, but the articles that are produced exclusively on the other 
side are in a very small minority and are becoming daily 
smaller. This is one reason why there is such deep anxiety 
there for a share, and that the lion's share, if possible, of our 
markets. When a foreigner tells you that this desire arises 
purely out of international love and amity for the United States 
and a strong desire to patronize our country without any 
ulterior motive, you should take his statement cum grano 
salis, — and sometimes the dose of salt must be a very big 
one. There must be a selfish motive in all trade, outside the 
ranks of socialists, and they are unselfish only theoretically. 

As Mr. McKinley has given the best definition of these two 
kinds of tariff, let us allow him the floor on that subject. In 
the course of a speech he says, regarding a revenue tariff: — 



" This brings us face to face with the two opposing systems, that 
of a revenue as distinguished from a protective tariff, and upon their 
respective merits they must stand or fall. Now, what are they? 
First, what is a revenue tariff? Upon what principle does it rest? 
It is a tariff or tax placed upon such articles of foreign production 
imported here as will produce the largest revenue with the smallest 
tax; or, as Robert J. Walker, late Secretary of the Treasury and 
author of the tariff of 1846, from whom the advocates of the 
measure draw their inspiration, put it : — 

"'The only true maxim is that which experience demonstrates 
will bring in each case the largest revenue at the lowest rate of duty, 
and that no duty be imposed upon any article above the lowest rate 



136 THE WALL STREET POINT OF VIEW. 

which will yield the largest amount of revenue. The revenue (said 
Mr. Walker) from ad valor ein duties last year (1845) exceeded 
that realized from the specific duties, although the average of the 
ad valor e7n duties was only 23.57 per cent, and the average of the 
specific duties 41.30 per cent., presenting another strong proof that 
the lower duties increase the revenue.' 

" To secure larger revenue from lower duties necessitates largely 
increased importations, and if these compete with domestic products 
the latter must be diminished or find other and distant, and I may 
say impossible, markets or get out of the way altogether. A genuine 
revenue tariff imposes no tax upon foreign importations the like of 
which are not produced at home ; or, if produced at home, in quan- 
tities not capable of supplying the home consumption, in which 
case it may be truthfully said the tax is added to the foreign cost 
and is paid by the consumer. 

" A revenue tariff seeks out those articles which domestic produc- 
tion cannot supply, or only inadequately supply, and which the 
wants of our people demand, and imposes the duty upon them, and 
permits as far as possible the competing foreign product to be im- 
ported free of duty. This principle is made conspicuous in the bill 
under consideration ; for example, wool, a competing foreign prod- 
uct, which our own flock-masters can fully supply for domestic 
wants, is put upon the free list, while sugar, with a home product of 
only one eleventh of the home consumption, is left dutiable." 

Mr. McKinley defines a protective tariff as follows : — 

" What is a protective tariff ? It is a tariff upon foreign imports so 
adjusted as to secure the necessary revenue, and judiciously imposed 
upon those foreign products the like of which are produced at home 
or the like of which we are capable of producing at home. It im- 
poses the duty upon the competing foreign product ; it makes it 
bear the burden or duty, and, as far as possible, luxuries only 
excepted, permits the non-competing foreign product to come in 
free of duty. Articles of common use, comfort, and necessity which 
we cannot produce here it sends to the people untaxed and free 
from custom-house exactions. Tea, coffee, spices, and drugs are 
such articles, and under our system are upon the free list. It says 
to our foreign competitor, if you want to bring your merchandise 
here, your farm products here, your coal and iron ore, your wool, 
your salt, your pottery, your glass, your cottons and woolens, and 
sell alongside of our producers in our markets, we will make your 



TARIFF FOR PROSPERITY ONLY. 137 

product bear a duty ; in effect, pay for the privilege of doing it. 
Our kind of a tariff makes the competing foreign article carry the 
burden, draw the load, supply the revenue ; and in performing this 
essential office it encourages at the same time our own industries 
and protects our own people in their chosen employments. That is 
the mission and purpose of a protective tariff. That is what we mean 
to maintain, and any measure which will destroy it we shall firmly 
resist, and if beaten on this floor we will appeal from your decision 
to the people, before whom parties and policies must at last be tried. 
We have free trade among ourselves throughout thirty-eight states 
and the territories and among sixty millions of people. Absolute 
freedom of exchange within our own borders and among our own 
citizens is the law of the Republic. Reasonable taxation and re- 
straint upon those without is the dictate of enlightened patriotism 
and the doctrine of the Republican party.' 1 

Free-traders, both foreign and domestic, seem to assume 
that the human race is one happy family, and that each nation 
should share its peculiar advantages and surplus production with 
every other nation. They appear to think this is the natural 
right of the latter, but they do not extend this style of reasoning 
to other concerns of life. They do not seem to see that our 
markets are a part of our natural rights which have been built up 
by the people, just as much as a piece of property belonging to 
any one is his peculiar right ; or, to make the illustration clearer, 
as much as a share or number of shares of stock in a corporation 
is the property of the person who purchases or obtains them 
for some valuable consideration. No one of common sense 
and discretion would think of asking that person for a part of 
those securities without paying for them \ and the United States 
citizen has just as vital and solid interest in the markets which 
he and perhaps some of his forefathers have assisted to build 
up, while the free-trade foreigners with the aid of our own free- 
traders were trying hard to pull them down, as the holder in 
the supposed case has in his corporation securities. The only 
difference is that the law of the land does not always recognize 
property in general markets, yet the claim of the citizen is as 
equitable from the standpoint of natural justice in the one case 
as in the other, and that is one of the strongest reasons 



138 THE WALL STREET POINT OF VIEW. 

why we want a statute law that will recognize our equitable 
claim. 

If it is asked why the consumer does not pay the full amount 
of the tariff, it is easy to point out that the sharp competition, 
both foreign and domestic, has a tendency to keep prices down, 
while in the case of the non-protected article, there is no com- 
petition, and the seller as a matter of course takes full advan- 
tage of the demand. The consumer and foreign producer pay 
the tariff between them. 

The doctrine of the Cobden Club is just the reverse of 
our tariff principle. Their rule is to tax no foreign product 
whose like is a home product. Our protective principle is to 
tax every product whose like is a home product, and to put 
those we do not produce on the free list. It is very well for a 
nation to take the Cobden attitude when it is not self-supporting 
in the prime necessities of life, and when it is to its great advan- 
tage to have all the ports of the world open to it ; but even 
England does not carry out the Cobden free-trade idea in toto. 

The ad valorem system has been done away with as far as 
possible in the new Dingley Tariff Bill, and the specific system 
has been adopted wherever it was practicable. The ad valorem 
system is based upon value, the other upon quantity. The 
one is based upon the foreign valuation, difficult of ascertain- 
ment and resting in the judgment of experts, whose interests 
are usually on the side of undervaluation ; the other rests upon 
quantity, fixed and well-known the world over, always deter- 
minable and always uniform. The one is assessed by the 
yard-stick, the ton, and the pound weight of commerce, and 
the other is assessed by the foreign valuation fixed by the 
foreign importer or his agent in New York or elsewhere, fixed 
by the producer, fixed by anybody, at any price, to escape the 
payment of full duties. The valuation under the ad valorem 
system is not even uniform throughout the United States, for 
the valuations fixed upon imported goods at the port of Boston 
are often different from the valuations fixed on the same class 
of goods arriving in New York, Philadelphia, San Francisco, or 
Charleston. 



TARIFF FOR PROSPERITY ONLY. 139 

So we do not have and cannot have a uniform value, for the 
value is subject always to the cupidity or dishonesty of the for- 
eign importer or producer. It is a system that has been con- 
demned by all the leading nations of the world, for the reason 
that there can be no honest administration of the revenue laws 
so long as the value is fixed thousands of miles away from the 
point of production and impossible of verification at home. 
Henry Clay said fifty years ago: "Let me fix the value of 
the foreign merchandise, and I do not care what your duty 

is." 

The " home market " is another object of disapproval on the 
part of the free-trader. He wants it abolished, and this with 
the knowledge that it absorbs more than nine tenths of our 
own products. He wants us to go outside and hunt for new 
markets, in competition with nations who can procure labor for 
as much per week, and in some instances per month, as we pay 
by the day. How would the country get along without the home 
market of New England, for instance? The New England 
states purchase about $200,000,000 worth annually of prod- 
ucts from the northwest, middle, and Pacific sections. It 
would be foolish to give up such a profitable market as this 
to go in search of another in some foreign country. Yet 
that is virtually what free-traders ask us to do, although we 
have competition to face, no matter which way we turn. Even 
in our great staple, wheat, competition is becoming exceedingly 
sharp. India, for example, which about a dozen years ago 
shipped only about 50,000 bushels, is now shipping more than 
50,000,000 annually; and India can put wheat down in the 
markets of Europe, counting both cost of production and car- 
riage, about as cheaply as we can transport it to the markets 
abroad, without calculating the cost of production. Of course 
that country is now handicapped in exports through the recent 
famine, but this is only temporarily. Just think of it, the 
transportation of wheat is as heavy an item to our farmers as 
the whole cost of raising and transportation is to the farmers 
of India ! This would seem impossible, but a prominent mem- 
ber of the House of Representatives, Mr. Dunn, is responsible 



140 THE WALL STREET POINT OF VIEW. 

for the figures ; and, if they are correct, competition in wheat 
is certainly out of the question. 

I learn from another source that agricultural wages in India 
range from $20 to $25 a year. This would be but a moderate 
rate per month for a farm laborer in the United States, where 
the average, I believe, is about $25. Yet we find some free- 
traders who seem to be under the delusion that wages are as 
high abroad as they are here. Mr. William Barbour, of the Flax 
Spinning Company, Paterson, New Jersey, who has also a flax 
mill at Lisburn, Ireland — the number of hands in the Irish 
mill being 2900 and in the New Jersey mill 1400 — says that the 
total pay roll is pretty nearly the same in both establishments, 
which makes the wages here more than double. The German 
laborer gets from 47 to 70 cents per day, and for skilled labor 
80 to 92 cents. In England the wages paid for agricultural 
labor is about $12.65 P er month. In British India the wages of 
men is 6 cents per day, and 1^- cents for women. In Kurnel the 
highest permanent wages are 50 cents per month. In Bom- 
bay and Madras laborers are paid from 6 to 1 2 cents per day. 

So these are some of the rates against which we should have 
to seek new markets for our grain if the free-trade doctrine 
should prevail. 

When the free-trader is driven from most of his strongholds 
in argument, he takes refuge in that of cheap clothing. A 
laughable incident occurred a few years ago in Congress illus- 
trating this point. Major McKinley played the comedy part 
with serious effect, and an honorable member of the House, 
who was also the head of a prominent clothing establishment 
in Boston, furnished the chief butt for the ridicule, in company 
with Mr. Mills of Texas. Major McKinley was arguing that the 
subject of cheaper clothing so much talked about was not broad 
enough for a national issue, and that there was more talk than 
reality about it. This was the whole scene as reported verbatim 
in the Congressional Record. Major McKinley was saying: — 

" I represent a district comprising some 200,000 people, a large 
majority of the voters in the district being workingmen. I have repre- 
sented them for a good many years, and I have never had a complaint 



TARIFF FOR PROSPERITY ONLY. 141 

from one of them, that their clothes were too high. Have you ? 
[Applause.] Has any gentleman on this floor met any such com- 
plaint in his district ? 

" Mr. Morse (of Massachusetts) . They did not buy them of me. 

" Mr. McKinley. No ! Let us see ; if they had bought of the 
gentleman from Massachusetts it would have made no difference, 
and there could have been no complaint. Let us examine the 
matter. 

" [Mr. McKinley here produced a bundle containing a suit of 
clothes, which he opened and displayed amidst great laughter and 
applause.] 

"Come, now, will the gentleman from Massachusetts know his 
own goods ? [Renewed laughter.] We recall that the chairman 
of the Committee on Ways and Means [Mr. Mills of Texas] talked 
about the laboring man who worked for ten days at a dollar a day, 
and then went with his ten dollars' wages to buy a suit of clothes. 
It is the old story. It is found in the works of Adam Smith. 
[Laughter and applause.] I have heard it in this House for ten 
years past. It has served many a free-trader. It is the old story, 
I repeat, of the man who gets a dollar a day for his wages, and hav- 
ing worked for the ten days goes to buy his suit of clothes. He 
believes he can buy it for just $10; but "the robber manufacturers" 
have been to Congress, and have got 100 per cent, put upon the 
goods in the shape of a tariff, and the suit of clothes he finds can- 
not be bought for $10, but he is asked $20 for it, and so he has got 
to go back to ten days more of sweat, ten days more of toil, ten 
days more of wear and tear of muscle and brain to earn the $10 to 
purchase the suit of clothes. Then the chairman gravely asks, Are 
not these ten days entirely annihilated ? 

"Now, a gentleman who read that speech or heard it was so 
touched by the pathetic story that he looked into it and sent me a 
suit of clothes identical with that described by the gentleman from 
Texas, and he sends me also the bill for it, and here is the entire 
suit, " robber tariffs and taxes and all " have been added, and the 
retail cost is what ? Just $10. [Laughter and applause.] So the 
poor fellow does not have to go back to work ten days more to get 
that suit of clotjies. He takes the suit with him and pays for it 
just $10. [Applause.] 

" But in order that there might be no mistake about it, knowing 
the honor and honesty of the gentleman from Massachusetts [Mr. 
Morse], he went to his store and bought the suit. [Laughter and 
cheers.] I hold in my hand the bill. 



142 THE WALL STREET POINT OF VIEW. 

"Mr. Struble (of Iowa). Read it. 

"Mr. McKinley (reading): — 

"' Boston, May 4, 1888. 

"']. D. Williams, bought of Leopold Morse & Co.; Men's, 
Youths 1 , and Boys 1 clothing; 131 to 137 Washington street, corner 
of Brattle. To one suit of woolen clothes, $10. Paid.' 

" [Renewed laughter and applause.] 

" I never knew of a gentleman engaged in this business who sold 
his clothes without a profit. [Laughter.] And there is the same 
$10 suit described by the gentleman from Texas that can be bought 
in the city of Boston, can be bought in Philadelphia, in New York, 
in Chicago, in Pittsburg, anywhere throughout the country at $10 
retail the whole suit, coat, trousers, and vest, and at 40 per cent, less 
than it could have been bought for in i860 under your low tariff and 
low wages of that period. [Great applause.] It is a pity to destroy 
the sad picture of the gentleman from Texas which was to be used 
in the campaign, but the truth must be told. But do you know that 
if it was not for protection you would pay a great deal more for these 
clothes ? " 

The bewildering inconsistency of some of the items in the 
Wilson Law bordered on the sublime of effrontery. For in- 
stance, while it taxed the farmer on almost everything he has 
to buy, it put one of his best paying staples, wool, on the free 
list, thus at the same time depriving the country of the means 
of making good cheap home-made clothing, turning the 
market over to the foreigner, and also depriving the people of 
cheap mutton. Cheap mutton is a great boon, especially when 
the " Beef Trust " raises prices. Mutton at such times has 
usually been advanced in price only very slightly as compared 
with other provisions. 

The restoration of wool to the farmer is another good point 
in the Dingley Bill, which is substantially a restoration of the 
McKinley statute, and it has thus far been largely instrumental 
in reviving a state of business and industrial prosperity such as 
that enjoyed under the free operation of the McKinley Law, 
especially during the last year of the Harrison administration. 

It was rather amusing to witness the ostensible surprise (for 
it would be an insult to their judgment to call it real) of cer- 



TARIFF FOR PROSPERITY ONLY. 143 

tain of the free- trade and low-tariff newspapers at the high 
tariff of the Dingley Bill. Certain of these exponents of public 
opinion pretended that they imagined the changes, if any, were 
going to be on the lines of the Wilson-Gorman Law. Now 
this is a confession that these organs know less than the rank 
and file of the voters whom they propose to instruct. Did not 
a large majority of the latter state emphatically, at the polls, 
that they had had enough of the Wilson Bill and all similar 
enactments ? and by the same silent expression did they not 
demand the higher tariff that would protect labor and the in- 
dustries upon which labor has to depend for sustenance? It 
was the plain duty of Congress to proceed, as the servants of 
the sovereign voters, to formulate this expression of the latter 
into a bill, which they did, and for the same reason it became 
the executive duty of the President to sign that bill, making it 
a law, if it were to his mind in harmony with the will of the 
people who elected both him and Congress to do this work. 

Some of these very newspapers referred to strongly advo- 
cated the election of the McKinley ticket, knowing that in the 
platform of the Republican party there was a plank promising 
" the most ample protection for wool, the product of the great 
industry of sheep raising, as well as for the finished woolens of 
the mill " ; and then the same newspapers turned around, 
because the Republican Congressmen proposed, very unlike 
free-trade politicians, to fulfil their promises as laid down in 
the platform on which they were elected. The only ques- 
tion about the wool schedule was the real meaning of " most 
ample protection " in the platform. Though the phrase is 
somewhat vague, perhaps designedly so, yet it is manifest that 
it cannot mean any less protection by the Dingley Law than 
that afforded by the McKinley Law. The people wanted it, 
and they were bound to have it. 

With all the free-trade complaints about high-tariff taxation, 
the foreigners have managed, even under the Dingley Law, to 
send us as much stuff of the kind easily produced here as 
would give profitable employment to half a million of men on 
this side. From these data, it can be faintly imagined what 



144 THE WALL STREET POINT OF VIEW. 

the condition of enforced idleness would be to a few millions of 
our wage earners under a full free-trade enactment, with the 
contraction of and loss to capital which that would imply. 

In order to prove that this state of things is no fancy picture, 
that my inferences are reasonable, and that the unfortunate 
history of distress and business stagnation is liable to repeat 
itself under either free-trade or very low-tariff principles, I here- 
with present the opinions and testimony of two of the most 
reliable witnesses on this subject, namely, Grover Cleveland 
and James Buchanan. 

In Buchanan's message of December, 1857, a year after his 
election and thirty-six years before the election of Mr. Cleve- 
land, the following language was used : — 

" The earth has yielded her fruits abundantly ; our great staples 
command high prices, and up till within a brief period our mineral, 
manufacturing, and mechanical occupations have largely partaken of 
the general prosperity. We have possessed all the elements of 
material wealth in rich abundance, yet notwithstanding these ad- 
vantages, our country in its monetary interests is at present in a 
deplorable condition. 

" In the midst of unsurpassed plenty we find our manufactures sus- 
pended, our public works retarded, our private enterprises abandoned, 
and thousands of useful laborers thrown out of employment and re- 
duced to want. Under these circumstances a loan may be required 
before the close of your present session, but this, although deeply to 
be regretted, would prove to be only a slight misfortune when com- 
pared with the suffering and distress prevailing among our people." 

In President Cleveland's message of August, 1893, ten 
months after his election, this emphatic language descriptive 
of the business and industrial situation was used : — 

" With plenteous crops, with abundant promise of remunerative 
production and manufacture, with unusual invitation to safe invest- 
ment, and with satisfactory assurance to business enterprise, sud- 
denly financial distrust and fear have sprung up on every side. 

" Numerous moneyed institutions have suspended, because abun- 
dant assets were not immediately available to meet the demands of 
frightened depositors. Surviving corporations and individuals are 



TARIFF FOR PROSPERITY ONLY. 145 

content to keep in hand the money they are usually anxious to loan, 
and those engaged in legitimate business are surprised to find that 
securities they offer for loans, though heretofore satisfactory, are no 
longer accepted. 

" Values supposed to be fixed are fast becoming conjectural, and 
loss and failure have involved every branch of business." 

The periods at which these similar conditions are described 
in similar terms were thirty-six years apart, but in each instance 
the free-trade mania was the ruling passion of the leaders of 
the party in power. 

Who can resist the inference that these similarly deplorable 
conditions of the country, so graphically described by both 
Presidents, originated to a large extent in the free-trade heresy ? 



CHAPTER XX. 

OUR FOREIGN TRADE AND FREE TRADE. 

The immense showing of our foreign trade for the fiscal year ending 
June 30, 1898. — Our balance of trade far ahead of that of other 
years and twice the amount of any previous record. — This has been 
achieved under a protective tariff which free-traders thought was going 
to ruin the country. — How it tallies with the free-trade doctrine of 
the Cobden Club and that of its representatives in this country. — The 
immense increase in the exports of our manufactured goods. — Our 
wealth increases as our imports diminish and as our exports increase. — 
We saved in 1898, by the much maligned protective tariff, an amount of 
money greater by half a billion than the national debt at the close of 
the Civil War. — The greatest profitable import to us was gold, of which 
we had a balance of $105,000,000 for the year. 

IF anything were wanting to illustrate the great advantages 
of protective tariff legislation over that for "revenue only," 
— which failed sadly in affording sufficient revenue, — the his- 
tory of the United States commerce for the fiscal year ending 
June 30, 1898, would amply supply that evidence. 

The exports of merchandise for this period amounted to 
$1,231,311,868. This exceeded the exports of the previous 
fiscal year by $180,318,312, and the exports of 1892 by $201,- 
000,000. The excess of exports over imports, or the balance 
of trade in our favor, amounted to $615,259,024, or more than 
twice the amount ever before recorded in our commercial his- 
tory. 

In the fiscal year in question we sold about two dollars' worth 
for every dollar's worth we bought, and our growing prosperity 
is manifested very clearly through this operation. According 
to the ideas of free-traders of the Cobden Club, such a bal- 
ance in our favor would indicate that the country was on the 

146 



OUR FOREIGN TRADE AND FREE TRADE. 147 

way to national ruin ; but it is difficult to understand this theory, 
so far as we are concerned, when the contrary reasoning gives 
us such a large balance on the other side of the ocean, and 
makes us to this extent a creditor nation. Such a financial 
position can hardly be regarded as a sign of national decay. Our 
wealth increases as our imports diminish, which is in direct 
contravention of the arithmetic of the Cobden Club. The 
total imports for the fiscal year amount to only $616,052,844, 
against $764,730,412 for the previous year. Our merchandise 
imports were the smallest since 1885. They fell $148,677,568 
short of the aggregate for 1897, and $250,000,000 below that 
of 1893. 

It has been computed by expert statisticians, one of whom 
is Bradstreet's, that the centennial year of 1876 was the turning- 
point when the balance began in our favor. Prior to that time, 
during eighty-five years from 1791, the balance had been gen- 
erally against us, the aggregate excess of imports over exports 
for the period having amounted to no less than $2,215,404,610. 
During the twenty-three years since the centennial year the ag- 
gregate excess of exports over imports had been $3,191,268,300, 
or an amount greater by $510,620,431 than our national debt 
at the close of the Civil War, in 1865. 

It is worthy of note that during the latter period, which 
shows such a large balance in our favor, the advocates of a 
protective tariff have been always gaining ground, with the 
exception of an occasional repulse from which they soon recov- 
ered, until they achieved a final triumph in the passage of the 
Dingley Bill. 

If free-traders had had their own way during the past twenty- 
three years, this immense balance of more than $3,000,000,000, 
about three fourths as much as all the gold above ground at 
present, and more than one fourth as much as the money of 
every description now existing, instead of having been spent in 
this country, would have gone to be spent in other countries, 
thus enriching them at our expense. If we had only had 
protection enough to retain those two odd billions which we 
lost through free trade in the first period of eighty- five years, 



148 THE WALL STREET POINT OF VIEW. 

we would now have, by actual trade calculation, about half the 
amount of all the money in the world. 

Though the fiscal year ending June 30, 1898, was the most 
prosperous in the history of our commerce, and of our financial 
relations with other nations, the proportion of our agricultural 
exports was not so large as in some former years. They were 
only 71 per cent, of the total, whereas in r894 they were 72 ; 
in 1893 they were 74; in 1892 they were 78; in 1881 they 
were 82 ; and in 1880 they exceeded 83. The exports of our 
manufactured goods, however, far more than made up the defi- 
ciency. They amounted to almost the unprecedented sum of 
$300,000,000, whereas they never before this time rose to more 
than $100,000,000. 

The increase in the total exports of merchandise for the 
previous ten years amounts to nearly 100 per cent. ; and yet 
some people, and among them many who were born here, pre- 
tend to think that this country has been decreasing in prosper- 
ity, and that it has seen its best days. 

These exports of our manufactures, under a protective tariff, 
have been made to all parts of the globe, thus showing that, 
in order to extend our markets for manufactured articles, a 
free-trade policy on the part of our government is not abso- 
lutely necessary. The free-trade assumption has never been 
so practically answered as by the figures above quoted. 

It will be remembered that after the passage of the Dingley 
Bill there was some disquieting talk in free-trade circles regard- 
ing the way our trade was going to be menaced by retaliation 
instead of reciprocity, especially by Germany, France, and 
Great Britain. The first, however, showed her spirit of retalia- 
tion in a friendly and appreciative manner by increasing her 
bill of goods from $50,000,000 in 1897 to $150,000,000 in 
1898; the second by increasing hers from $40,000,000 to 
$100,000,000; and the third, our greatest competitor, by in- 
creasing hers from $362,000,000 to $540,000,000. Even Dark- 
est Africa made an increase from $3,000,000 to $17,000,000. 
Japan increased her order from $4,000,000 to $21,000,000, 
and China her quota from $4,500,000 to $10,000,000, 



OUR FOREIGN TRADE AND FREE TRADE. 149 

while Austro-Hungary, which had taken only $500,000, in 
1897-98 raised her demand to $5,000,000. Belgium rose 
from $10,000,000 to $47,000,000, Denmark from $3,000,000 
to $12,000,000, and the Netherlands jumped from $16,000,000 
to $65,000,000. 

There is nothing more agreeable in reviewing the list of 
these increases than to reflect upon the curious action of Great 
Britain, who had been preparing to wreak her retaliative ven- 
geance upon lis, on account of the tariff laws. Instead of pur- 
suing this inimical policy, she turned around, and, in a truly 
Christian spirit, even before the sun had gone down upon her 
wrath, nearly doubled her former large order. Such enemies 
in commerce are our truest friends. 

Another large item of prosperity is shown in the commercial 
status of gold. The excess of imports in that precious article 
came within $51,000 of being $100,000,000, and if we count 
$5,000,000 of gold ore, an addition of $105,000,000 will appear 
to our balance of trade credit. When to this amount $60,000,000 
from our gold mines is added, we need have no dread of gold 
shipments, which have so frequently been the scare of the 
stock market, and have often created a nervous feeling in 
financial circles generally. 

Now, we may safely arrive at the conclusion that in order 
to increase our prosperity further our importations may be 
limited very considerably. The most important of these is 
gold, and the others are classified in that part of the tariff 
schedule which includes all articles of necessity which we do 
not manufacture ourselves, most of which are on the free 
list. 

The wealthy are also free to enjoy the foreign luxuries that 
they may fancy by paying the tariff, though that is in every 
instance so much loss to our own country. There is no law 
against bestowing benefits and free gifts personally upon for- 
eigners, and this may be looked upon to some extent as 
reciprocity. We owe some of our great institutions of learning 
to the free gifts of foreigners, but though we may owe them 
much, yet we would be overpaying our indebtedness to make 



ISO 



THE WALL STREET POINT OF VIEW. 



a present of our industries to them, the greatest source of 
our wealth and increasing prosperity. 

It is superfluous to multiply arguments on the national wis- 
dom of the policy of protection. The foregoing figures, dem- 
onstrating our great prosperity as the result of that policy are 
sufficient, and this report of our foreign trade by the Bureau 
of Statistics amply justifies the policy of a tariff for the protec- 
tion of our industries, artisans, and laborers, as well as for gov- 
ernment revenue, and not for revenue only. 

Statistics of our foreign trade in the fiscal year ending June 
30, 1899, show a favorable balance of trade, not so large as in 
the former year, but still very considerable. In compensation 
for the large increase in our imports of merchandise, our ex- 
ports of manufactured articles show an increase of $50,000,000 
We may also study how raw material contributes to this end, 
and compare the commercial standing of other nations of the 
world with our own \ we may also reflect upon our last decade's 
surplus prosperity, our great pelagic expansion and its wonder- 
ful possibilities, our commercial relations to other nations, and 
what those nations think of us in these respects. 

The addendum to this chapter will bring up the statistical 
position of our foreign trade to the end of the fiscal year end- 
ing June 30, 1899. The comparative exports and imports for 
the two years can be seen at a glance, thus : — 

For twelve months ended June 30 : — 

Merchandise — 1899 



Imports — Free of duty 
Dutiable 

Total . 

Exports — Domestic 
Foreign 

Total . 
Excess of exports 

Gold — 
Imports . 
Exports . 

Excess of imports 



$300,25 1,333 
396,826,055 

#697,077,388 

$1,204,370,305 

23,073,120 

$1,227,443,425 

530,366,037 



,954,603 
37,522,086 



1898 
$291,414,175 
324,635,479 

$616,049,654 

$1,210,291,913 
21,190,417 

$1,231,482,330 

615,432,676 

$120,391,674 
15,406,391 



1,432,517 $104,985,283 



OUR FOREIGN TRADE AND FREE TRADE. 151 



Silver — 

Imports . 
Exports . 

Excess of exports . 

Merchandise — 
Month, June. 
Imports — Free of duty 
Dutiable 

Total . 

Exports — Domestic 
Foreign 

Total . 
Excess of exports 
Gold — 

Imports . 
Exports . 

Excess of imports 
Excess of exports 
Silver — 

Imports . 
Exports . 

Excess of exports 



1899 

$30,696,878 
56,318,855 



1898 

$30,027,781 
55,105,239 



$25,621,977 $24,077,458 



$25,881,331 
35,804,877 

$61,686,208 

$94,828,732 
i>995>4i3 



$22,820,436 

28,344,795 

$51,165,231 

$93,012,297 
1,966,426 



$96,824,145 


$94,978,723 


355137*937 


43,813,492 


$3,105,686 
20,908,327 


$3,33 > 61 * 

375^29 


$17,802,641 


$2,955,083 


$1,917,21$ 
3,843,099 


$2,028,803 
4,156,650 



$1,925,884 



$2,127,847 



These figures are compiled by the Bureau of Statistics at 
Washington. The first, and most attractive item, perhaps, in 
this table is our balance of trade or excess of exports over 
imports. It is still large, namely, $530,366,037, though fully 
$85,000,000 less than it was the previous year, our imports 
being $81,000,000 more. 

There are items which partly compensate for this large 
increase in our imports of merchandise. Our exports of manu- 
factured articles, which are considered separately (and not yet 
returned), will show an increase of probably $50,000,000 over 
those of 1898. Moreover, the increase in our imports is largely 
of raw material and goods that we do not produce except on a 
small scale. Our profits through the raw material are real- 
ized in the finished articles which we manufacture from this 
material, and export. Our decrease in crop exports, therefore, 



152 THE WALL STREET POINT OF VIEW. 

is considerably offset by our increase in the exports of manu- 
factured articles. 

It is worthy of note that, in the calculation of this question 
of foreign trade, we have the advantage of most other nations 
in our large possession of raw material to be worked up, as 
well as the material which furnishes the power for such work- 
ing. Germany, for example, one of the most enterprising of 
our manufacturing competitors, has to import very large quan- 
tities of her raw material and a considerable part of her 
coal. 

If, in this comparison of the increase of our manufactures 
with those of other nations, we should take ten years instead of 
two, the increase for that period would probably exceed ioo 
per cent., perhaps no or more. The problem of our foreign 
trade would become still more interesting, and would place us 
in a position where, by a kind of inevitable destiny, we should 
become the general absorber of all the surplus business in the 
world, and that without any extraordinary ambition or aspira- 
tions on our part to attain the distinguished honor, but by 
necessity of our position. 

Meanwhile we are now actually doing, through the medium 
of a protective tariff, paradoxical as it may seem, what our 
free-trade friends have long been insisting that we should do 
under their tutelage, — capturing the world's markets in defi- 
ance of cheaper labor throughout the rest of the globe. Those 
ancient centers of commercial power would have stood aghast 
at the idea of such an achievement. Who knows but that in 
the future we may become not only the center of financial 
power and attraction, but the peaceful arbitrator of political 
and universal harmony among the nations, when peace con- 
ventions shall take rank as historic curiosities in the annals 
of a fully developed Republic of the World? 

In the language of Tennyson : — 

" Not in vain the distance beacons. Forward, forward let us range. 
Let the great world spin forever down the ringing grooves of change. 
Thro' the shadow of the globe we sweep into the younger day ; 
Better fifty years of Europe than a cycle of Cathay." 



OUR FOREIGN TRADE AND FREE TRADE. 153 

Let us improve, if possible, in our prosaic way on the Tenny- 
sonian sentiment, by taking for the periodic times of our evolu- 
tion, ten years each of America, instead of fifty years of Europe 
or a cycle of China. 

The result of this retrospect of a decade shows, as I have 
just stated, that our increase in foreign trade has exceeded 100 
per cent. How has it been during the same period with other 
great commercial nations? We will take the greatest of these, 
the British, for the purpose of comparison. Let us hear what 
Lord Farrar has to say upon the subject. At a recent meeting 
of the British Iron Trade Association, this eminent authority, 
speaking on the famous subject of the "open door" in com- 
merce, said : — 

" The gist of the case put before me is that, while the exports of 
the iron and steel manufactures of Great Britain are still very large, 
and indeed larger than those of any other country, their proportion 
to similar industries in other countries, especially Belgium, Germany, 
and the United States, is much less than it was ; that there is a 
large and increasing import, of foreign iron and steel into the United 
Kingdom, and that foreign countries are rivaling us in neutral mar- 
kets. From these facts it is suggested that this important branch 
of our industry may be in danger from foreign competition ; and it 
is whispered, rather than suggested, that we may have to depart 
from the policy of the i open door ' and exclude foreign iron and 
steel goods by different duties." 

Now, while this is a thoughtful expression of a most intel- 
ligent representative of one of the most favored nations in 
commerce, some of our free-trade journals are attempting to 
prove that a nation becomes wealthier in proportion to the con- 
tinued increase of its imports as compared with its exports. 

Let us see what that great authority of John Bull, the London 
Iron and Coal Trades^ Review, has to say on the subject. 

"In 1876 Great Britain was exporting to the United States from 
500,000 to 1,000,000 tons of iron and steel annually, and probably 
the last thing that troubled our manufacturers at that time was the 
reflection that the United States could ever manufacture those com- 



154 THE WALL STREET POINT OF VIEW. 

modities so cheaply as to be able to compete against themselves in 
Europe markets. But the times change. We have lived to see the 
day when it is not the getting into American markets, but the keep- 
ing of Americans out of our own, that is the chief source of anxiety. 1 ' 

Now, amid a host of general conclusions that might be drawn 
from the premises and considerations herein enumerated, 
several are clearly evident ; one is that our country, at the end 
of the century, exhibits the greatest developments in all history, 
and, again, that our own progress has been a thousand times 
greater in all respects than that of any other nation either 
ancient or modern. Who can venture to predict what our 
millennium will be? 

It is true, this comparison savors of self-glorification, but it 
seems thoroughly warranted by events, as well as by what little 
we can divine of future prospects. 



CHAPTER XXL 

RETROSPECTS AND PROSPECTS. 

Certain comments and predictions about free-trade legislation and an 
answer to charges of pessimism. — Analysis of past legislation in its 
practical outcome, and the prospective hopes of the operation of the 
measure now gone into effect. 

STATEMENTS have been made by certain of my critics 
that I have been pessimistic on questions in which free- 
trade theories were concerned. 

Such an opinion does not do me full justice. On the con- 
trary, I have been optimistic regarding future prosperity. I 
have, for instance, been of opinion that the country, though 
seriously handicapped by free-trade theories embodied in law, 
might yet rise superior to them and grasp prosperity, though 
of course not to the same extent as under a judicious measure, 
affording protection to our industries and to the wages of labor. 

I am on record as having given free expression to such 
opinions on various occasions. I have professed only the 
capacity of reasoning regarding the future from observation of 
the past and present ; a. power which most people of ordinary 
intellect and education may possess in a greater or less degree, 
according to the closeness and accuracy of their observations. 

Napoleon said, " labor is genius," and it was a familiar 
aphorism of the old Latin writers that labor could conquer and 
surmount all obstacles. These are expressions of a solid truth 
in an exaggerated form, and simply serve to remind us of the 
inherent power of industry both mental and physical, at the 
same time affording us encouragement under apparent defeat, 
and showing us the fatuity of relinquishing hope under the 
most discouraging circumstances. Most of this world's prog- 

155 



156 THE WALL STREET POINT OF VIEW. 

ress is dependent upon hope. Impelled by laudable feelings 
of this nature, I wrote the following article, for instance, in 
January, 1894, at the request of the proprietor of the New 
York World: — 



"You ask my opinion as to the prospects of business for 1894. 
You could not have put a question about which I should be less 
disposed to be prophetic. There is not much difficulty, perhaps, in 
making a diagnosis of the present condition of the patient, but if 
you ask me what is to be the course of his recovery, I must in 
return ask you, What are going to be the factors acting upon his 
enfeebled system during the process of convalescence ? 

"We all know that the trade, the industry, and the finances 
of the country were, last summer and autumn, prostrated to a 
degree beyond all former experiences. But just what that portends 
as to the progress and the date of recovery is not to be determined 
off-hand. We are not to regard the panic of 1893 as one of the 
ordinary kind. It was not caused by industrial over-production, nor 
by financial inflation, such as comes, for instance, out of over-issues 
of securities for new railroads or other new enterprises ; nor was 
it caused by over speculation and an excessive inflation of prices ; 
nor by war, nor by sympathy with great European political compli- 
cations. None of these ordinary causes of panic had anything to 
do with the great crisis of last year. The entire business of the 
country in all its departments of production, trading, financing, 
and credit was, as a rule, in a perfectly sound, conservative, and 
fairly profitable condition when the tidal wave struck us. It started 
and it progressed to its culmination under a sudden fright, lest the 
excess of silver introduced into our currency system might cause a 
run on the Treasury gold and compel a general suspension of gold 
payments, the fear being instigated by a sudden and very large 
export of gold. This blow at the credit of the government became, 
in its rebound, a still greater blow at the general credit system of 
the country at large. Lending at banks was suspended, and busi- 
ness had to be conducted on a cash basis, while sudden liquidation 
became universal, and failures were consequently unprecedented in 
number. 

" There was here surely havoc enough ; never so much, never 
so cruel. But there is a most radical difference between a panic 
coming upon sound conditions and one precipitated by intrinsic 
rottenness ; all the difference that there is between an accident to 



RETROSPECTS AND PROSPECTS. 157 

a man in vigorous health and to one weakened by constitutional 
disease. In one case, nature helps by a self-curative process ; in the 
other, diseased organic conditions aggravate the mischief caused 
by the accident. For this reason, I look for a much more rapid 
recovery from the effects of the purely monetary causes of the panic 
than has followed our previous great crises ; and, of course, the 
more so as the source of the silver alarm has been removed by 
Congress, and public opinion has shown its resolute soundness on 
that question. 

" By this time, we should have witnessed a much larger measure 
of recovery than has actually appeared, had it not been for the 
intervention of a new disturbance of confidence arising from the 
introduction of measures for revolutionizing the commercial policy 
of the country. Without caring here to express my views either for 
or against the policy of the Administration in that matter, it is not 
to be denied that virtually our entire manufacturing industries 
earnestly regard the proposed large reductions of duty as vitally 
threatening their business, which is a most potential factor bearing 
on confidence, regarding which there can be no question that the 
interval of transition from the old conditions to the new could not 
be attended with anything short of widespread suspension of both 
manufacturing and trade ; and, as a matter of fact, it is estimated 
by competent authorities that the retail business of the country is 
now curtailed to the extent of from 15 to 20 per cent, of its usual 
volume, while in most branches of manufacturing the contraction 
is double that proportion. 

"That is the condition of affairs now patent to everybody's eyes. 
It is so alarming that many cool-headed men even are scared out of 
all exercise of cool judgment, and ninety men out of every hundred 
are more or less hopelessly pessimistic about the future. I confess 
that I am unable to go to the full length of these forebodings. As 
a young country of marvelous wealth and unequaled powers of 
recuperation, we are capable of a rapidity of convalescence that can 
be matched by no other nation. As a largely self-dependent coun- 
try, we are little exposed to suffer in sympathy with the causes that 
have prostrated the European commercial states and their colonial 
dependencies and trade connections. Europe is vitally dependent 
upon us ; we can afford to be comparatively independent of Europe. 
In the next place, we have none of the debris of dry rot to get rid 
of. The equipments of our industries are fresh, complete, up to 
the most modern improvements, and only delayed by the getting up 
of steam, while capital is waiting in immense idle hoards to apply 



158 THE WALL STREET POINT OF VIEW. 

the impelling power, and the banks are prepared to afford as much 
support to business as they were giving on the eve of the unsus- 
pected panic. These certainly are not the sort of conditions that are 
ordinarily found at this early stage after an ordinary panic ; and for 
this, among other reasons, I do not expect recovery in this case to 
follow the pace of former tardy recoveries. 

" The most stubborn obstacle that now remains to be overcome 
is the suspension of business until the new tariff duties take effect. 
Here, also, I think the real probabilities are underestimated in the 
present gloomy public mood. We have already used up our stocks 
of merchandise to the verge of absolute exhaustion ; our imports 
are declining to such an extent that the December arrivals of dry 
goods at New York were only one third of those of a year ago. 
With supplies in this condition, and with the current output of 
manufactures falling behind the requirements of consumption, it is 
not difficult to see that our closed factories must reopen long before 
the new tariff goes into operation ; and, with the reduction in the 
prices of raw materials and the general concessions in wages that 
are taking place, there is no apparent reason why moderate profits 
should not be made upon an early resumption of operations. In 
proportion as work is resumed, labor will be better employed ; and 
the better employment of labor will extend the market for goods. 
Under these conditions, the way seems clear to a gradual revival 
of business and a steady sliding into a healthier and more active 
condition of affairs. Any mere mood of. feeling proves to be a 
transient sentiment among an active commercial people, and, in 
this case, we will soon recover our courage and cease to view the 
situation i through a glass darkly.' By the close of 1894, I expect 
to witness a degree of recovery far beyond what most of us now 
dare to predict. To that extent, I am willing to become a prophet." 

Now, this process of reasoning was based on a comparison 
of the past with the present, and the conclusions were drawn on 
premises that left out the surprises which never can be fore- 
seen. Such results might have been as foreshadowed, even 
in the face of the semi-free-trade measure, had it not been 
for fresh agitation at the wrong time on the silver question 
in connection with the Sherman Act. 

Nobody can now dispute my right to reason on the practical 
consequences of the Wilson Law after it has cost the nation 



RETROSPECTS AND PROSPECTS. 1 59 

a positive deficiency debt of $200,000,000 ; to say nothing of 
the far greater loss in trade and commerce and the various 
national industries, together with the untold sufferings borne by 
the armies of idle laborers, the depressed and bankrupt condi- 
tion of our farmers ; and last, though not least, the business 
of Wall Street reduced to a state of stagnation never experi- 
enced prior to that time. I refer to the time between the 
passage of that measure and the inauguration of Mr. McKinley, 
and for a month or two after the latter event, while free-trade 
consequences were still at work and ably assisted in their de- 
pressing effect by obstructionists in the United States Senate. 



CHAPTER XXII. 

THE TRANS-MISSOURI CASE. 

A ruinous decision of the Supreme Court of the United States. — Destruc- 
tive influence on values and a blow to general business. — A pool law 
wanted that will ensure railroad and business prosperity. 

THERE has been no other subject, perhaps, in the indus- 
trial world or in finance and economics for a long period, 
on which there has been a greater variety of opinions than on 
the decision of the United States Supreme Court in the case 
of the Trans- Missouri Freight Association, on the 2 2d of 
March, 1897. Nor has there been any other decision in a long 
time which took by complete surprise so many judges, lawyers, 
financiers, railroad managers, and newspaper men. 

It is my opinion that this famous decision has done more 
injury in the disturbance of values and the wrecking of fortunes 
than any half dozen judicial decisions that have ever been 
rendered in this country. It came, too, in the very worst 
possible time, just when the country was making the hardest 
struggle for recuperation. 

This Trans-Missouri Association, composed of eighteen rail- 
roads beyond the Missouri River, as its name indicates, and 
covering territory between that eastern boundary and the 
Rocky Mountains, had entered into an agreement, the real 
purport of which was to maintain rates up to a living standard 
on the "live and let live" principle for all, and so as to pre- 
vent any of the properties from being driven into bankruptcy 
by what is known in railroad circles as " cut-throat compe- 
tition." 

Looking at the matter from a common-sense point of view, 
there seems to the ordinary mind, unbiased by any predilec- 

160 



THE TRANS-MISSOURI CASE. i6l 

tions, nothing unfair in a proposition of this kind. It was 
merely an arrangement for mutual defense, the bond of mutu- 
ality being assurance that the weaker brethren would not or 
could not readily shirk the maintenance of the principle of the 
Association upon which its efficiency, vitality, success, and very 
existence depended, namely, that of inseparable union for one 
and the same purpose — protection to all. 

The essential motive was to maintain reasonable rates, and 
the object of the association is stated clearly by itself in the 
following language, " For the purpose of mutual protection by 
establishing and maintaining reasonable rates, rules, and regula- 
tions on all freight traffic, both through and local." 

The particulars of the agreement, which are described in 
detail, relating to management and disposition of freight 
throughout the territory of the Association, are of no special 
interest. 

In 1890 there was a law passed of which John Sherman, 
then United States Senator from Ohio, was the father. This 
law was directed against trusts that were organized in restraint 
of trade and against public policy. The act was termed " An 
Act to protect Trade and Commerce against Unlawful Re- 
straints and Monopolies. " The first short section describes, 
in brief, all that is material in the act, for the purpose of un- 
derstanding its design. It reads as follows : — 

" Every contract or combination, in the form of trust or otherwise, 
or conspiracy, in restraint of trade or commerce among the several 
states, or with foreign nations, is hereby declared to be illegal. 
Every person who shall make any such contract or engage in any 
such combination or conspiracy shall be deemed guilty of a mis- 
demeanor, and, on conviction thereof, shall be punished by fine not 
exceeding five thousand dollars, or by imprisonment not exceeding 
one year, or by both said punishments in the discretion of the 
courts." 

Now, the point to be proved in this case is that the Associa- 
tion in question had been guilty of the offense against which 
the act is directed, namely, " conspiracy in restraint of trade," 
and arguments of great length were used for the purpose of 

M 



162 THE WALL STREET POINT OF VIEW. 

proving this allegation. The opinion was written by Justice 
Wheeler H. Peckham and consisted of about 25,000 words. 
Some of the arguments are strong, but some of them are far- 
fetched, and, to the minds of the able minority of four judges 
of the Supreme Court, were far from being conclusive regarding 
the guilt of the defendants. 

If the Sherman Anti-Trust Law and its latest interpretation 
by a bare majority of one in the Supreme Court are to stand, 
it is difficult to see how any business where more than one is 
concerned on either side, can be transacted legally. Almost 
any transaction can, by strict literal interpretation of the words 
of the statute and the nature of the case, be construed as im- 
plying " conspiracy and restraint of trade." 

It seems to me that the effect of the Joint Traffic Associa- 
tions is to hold up the weak roads, whereas the decision of the 
Supreme Court is to drive them into bankruptcy, which will 
enable the strong roads to acquire them on their own terms. 
This will make poor corporations poorer and rich corporations 
richer. If railroads are to be compelled to surrender to the 
decision of the United States Supreme Court, then consolida- 
tion of roads will be the inevitable result, and before the close 
of the next decade we may witness in this country four or five 
great systems of railroads, instead of, as at present, several 
hundreds of them. Already strong evidences of this appear in 
the New York Central and Pennsylvania acquisitions. Neither 
the Supreme Court nor Congress can interfere with one road 
leasing itself to another, nor preventing one road from buying 
another ; therefore, instead of discouraging consolidation of 
roads, which should be the case for the general good of the 
country, the Sherman Anti-Trust Law, under the Supreme 
Court decision, will drive them into a confederation comprised 
of few. 

This process would certainly be in "restraint of trade," and 
would so far restrain the smaller roads as to wipe them out of 
existence, making the monopolistic circle of management more 
and more circumscribed at every freezing-out operation, until 
the supreme managerial power would be in the hands of a few 



THE TRANS-MISSOURI CASE. 163 

companies or possibly only one. This would be, as it appears 
to me,. a very dangerous power, not only in restraint of trade, 
but in restraint of government as well. It might soon become 
powerful enough to dictate terms to government. Then what 
after that? Probably a railroad oligarchy to supersede the 
Republic, rendered possible by the manner in which the 
highest court of the nation had been forced to interpret an 
unwise statute which throttled the freedom of contract and 
broke up the government for, of, and by the people. 

The decision, however, settles the question in the meantime 
regarding any combination or agreement among railroad com- 
panies to prevent ruinous rate-cutting where the facts are so 
clearly on record that they are capable of proof; and it would 
never do to invent or devise mere schemes of evasion of the 
law, for this would be a false and fraudulent method of doing 
business. The companies, however, can act individually and 
independently, and if they would only observe the amenities of 
good society toward one another, things might go very well 
practically. 

If the Joint Traffic Association, for instance, should be com- 
pelled to disband under the decision of the United States 
Supreme Court, why could not the members of that association 
form themselves into a social club, where they could meet and 
confer with each other ? It would certainly tend to preserve 
a harmonious feeling amongst them, and most likely result in 
uniformity of action in the conduct of their business. They 
could talk over the rate question among themselves and easily 
arrive at conclusions. One of the number could then establish 
on his road the rates talked of, and all the others would have the 
right to adopt similar ones voluntarily. Such action could not 
be considered as a combination or an agreement in restraint of 
trade and commerce. It is a well-known fact that most of the 
important diplomatic matters in the relations between civilized 
nations are talked over and virtually arranged at the social 
board, which is about the same method as that proposed above 
for the railroad managers to meet the present unfortunate pre- 
dicament in which they are placed. 



1 64 THE WALL STREET POINT OF VIEW. 

Though the opinion of the majority of the court observes in 
many of its paragraphs an apparently strict adherence to the 
letter of the law, it may, perhaps, neglect the spirit to a certain 
extent. The law, in its essence, is the very thing that the court 
asserts its infraction to be. It is in restraint of trade and against 
public policy. The only reliable relief, therefore, is to be found 
in its repeal. All plans that may be invented to help tide 
over the trouble will prove nothing but temporary makeshifts, 
and will be likely to involve the experimenter in further dif- 
ficulties. 

Returning to the decision, it will be seen that the chief point 
of disagreement between the majority and the minority reports 
is that the majority adheres to an extremely literal construction, 
unmindful of the scriptural admonition that " the letter killeth, 
but the spirit giveth life " ; while the minority dwells on the 
spirit and the supposable intention of the law ; for nobody who 
knows the man can conceive of the possibility of John Sherman 
framing a measure that would drive people, possessed of the 
most honest intentions, out of business, and help to throw into 
chaos that financial fabric which he has spent many of the best 
years of his life in helping to construct. 

This view the minority more fully elucidates by the following 
strictures on the forced construction of the majority : — 

" But, admitting arguendo the correctness of the proposition by 
which it is sought to include every contract, however reasonable, 
within the inhibition of the law, the statute, considered as a whole, 
shows, I think, the error of the construction placed upon it. Its title 
is < An act to protect trade and commerce against unlawful restraints 
and monopolies.' The word ' unlawful' clearly distinguishes be- 
tween contracts in restraint of trade which are lawful and those 
which are not. 

"The plain intention of the law was to protect the liberty of con- 
tract and the freedom of trade. Will this intention not be frustrated 
by a construction which, if it does not destroy, at least gravely 
impairs both the liberty of the individual to contract and the freedom 
of trade ? If the rule of reason no longer determines the right of 
the individual to contract, or secures the validity of contracts upon 
which trade depends and results, what becomes of the liberty of the 



THE TRANS-MISSOURI CASE. 165 

citizen or the freedom of trade ? Secured no longer by the law of 
reason, all these rights become subject, when questioned, to the mere 
caprice of judicial authority. 

" Thus, a law in favor of freedom of contract, it seems to me, is so 
interpreted as to gravely impair that freedom. Progress, and not 
reaction, was the purpose of the act of Congress. The construction 
now given the act disregards the whole current of judicial authority, 
and tests the right to contract by the conceptions of that right 
entertained at the time of the year books, instead of by the light 
of reason and the necessity of modern society. To do this violates, 
as I see it, the plainest conception of public policy, for, as said by 
Sir G. Jessel, Master of the Rolls, in Printing Company vs. Samp- 
son, < If there is one thing which more than another public policy 
requires it is that men of full age and competent understanding shall 
have the uttermost liberty of contracting, and their contracts, when 
entered into freely and voluntarily, shall be held sacred, and shall 
be enforced by courts of justice.' 

"The remedy intended to be accomplished by the act of Con- 
gress was to shield against the danger of contract or combination 
by the few against the interest of the many and to the detriment of 
freedom. The construction now given, I think, strikes down the 
interest of the many to the advantage and benefit of the few. It 
has been held in a case involving a combination among workingmen 
that such combinations are embraced in the act of Congress in ques- 
tion, and this view was not doubted by this court." 

But the destructive and inequitable tendency of the act is 
probably most clearly discerned in the light thrown upon it by 
Judge White's opinion on its far-reaching influence on labor 
combinations : — 

"The interpretation of the statute, therefore, which holds that 
reasonable agreements are within its purview, makes it embrace 
every peaceable organization or combination of the laborer to bene- 
fit his condition either by obtaining an increase of wages or diminu- 
tion of the hours of labor. 

" Combinations among labor for this purpose were treated as 
illegal under the construction of the law which included reasonable 
contracts within the doctrine of the invalidity of contract or com- 
binations in restraint of trade, and they were only held not to be 
embraced within that doctrine either by statutory exemption there- 



1 66 THE WALL STREET POINT OF VIEW. 

from or by the progress which made reason the controlling factor 
on the subject. 

" It follows that the construction which reads the rule of reason 
out of the statute embraces within its inhibition every contract or 
combination by which workingmen seek peaceably to better their 
condition. It is, therefore, as I see it, absolutely true to say that 
the construction now adopted, which works out such results, not 
only frustrates the plain purpose intended to be accomplished by 
Congress, but also makes the statute tend to an end never contem- 
plated, and against the accomplishment of which its provisions were 
enacted. 

" To my mind, the judicial declaration that carriers cannot agree 
among themselves for the purpose of aiding in the enforcement of 
the provisions of the Interstate Commerce Law will strike a blow at 
the beneficial results of that act, and will have a direct tendency to 
produce the preferences and discriminations which it was one of 
the main objects of the act to frustrate." 

As an instance of some of the fallacies and inconsistencies of 
the reasoning on the part of the majority, the following from 
the majority report is very pertinent : — 

" In business or trading combinations, they [meaning the con- 
spirators aforesaid] may even temporarily or perhaps permanently 
reduce the price of the article traded in or manufactured, by reduc- 
ing the expense inseparable from the running of many different 
companies for the same purpose. Trade or commerce under these 
circumstances may, nevertheless, be badly and unfortunately re- 
strained by driving out of business the small dealers and worthy 
men whose lives have been spent therein, and who might be unable 
to readjust themselves to their altered surroundings. Mere reduc- 
tion in the price of the commodity dealt in might be dearly paid for 
by the ruin of such a class, and the absorption or control over one 
commodity by an all-powerful combination of capital.'" 

This language is noteworthy, for the pathetic sympathy it indi- 
cates is even more remarkable when the source from which it 
emanates is thoroughly appreciated. Shocking as it may seem 
at the first blush, these Supreme Court judges have all been 
guilty of the offense which they here seem to deplore. They 
have either established or been prominent members of large 



THE TRANS-MISSOURI CASE. 167 

law firms open to the charge of the same kind of " conspiracy 
and restraint of trade " aforesaid, and without any compunc- 
tion, so far as the public know, until exhibited in this opinion. 
They have, to use their own language, " driven out of business 
[the law business, however] worthy men whose lives have been 
spent therein, and who might have been unable to readjust 
themselves to their altered surroundings,' ' were it not for the 
law trusts. To such disaster have these hard-working, edu- 
cated, honest lawyers been brought eventually through the 
restraint of trade and the unlawful conspiracy practiced by 
the large law firms. Yet this is not the worst of it, as regards 
the case of the law firms compared with other monopolies 
and trusts. The latter have the merit of reducing the price 
of the commodity dealt in, which Judge Peckham declares 
" might be dearly paid for " by the ruin of the class producing 
the commodity. But who ever heard of a large law firm reduc- 
ing the price of its advice and services ? If it did, its brethren 
of the bar would in all probability apply for a writ de lunatico 
inquirendo for the purpose of testing its sanity, or the Bar 
Association would be induced to introduce a bill in Congress 
for the maintenance of " reasonable costs." 

In contradistinction to the majority of opinion it seems, on a 
fair reading of the Interstate Commerce Act, without being too 
closely technical, that Congress must have had in mind the 
idea of protecting reasonable rates when that measure was 
passed. The first section of the act reads as follows : — 

" All charges for any service rendered, or to be rendered, in the 
transportation of passengers or property as aforesaid, or in connec- 
tion therewith, or for the receiving, delivering, storage or handling 
of such property, shall be reasonable and just, and every unjust and 
unreasonable charge for such service is prohibited and declared to 
be unlawful." 

This would seem to recognize the principle of maintaining 
reasonable rates, and the terms are evidently employed emphat- 
ically in conspicuous contrast to " unjust and unreasonable" 
rates, which are declared to be unlawful. 



168 THE WALL STREET POINT OF VIEW. 

One of the worst features connected with the Sherman Anti- 
Trust Act has been its uncertainty, coupled with the possibly un- 
witting deception that has been practised in its administration. 
The law had not only reposed quietly for six years without 
its mischievous or fatal tendency being discovered, and without 
giving any intimation of the coming explosion, but it had lulled 
the people, and especially the railroad companies, into a feel- 
ing of perfect security through the several decisions of the 
United States District Court and Circuit Court of Appeals. 
In every instance the pooling clause and the agreement to 
sustain reasonable rates had been sustained until the Trans- 
Missouri case arose. A series of decisions by these inferior 
courts, therefore, had induced the parties concerned to believe 
that contracts, like that of the Trans-Missouri Freight Associa- 
tion, were perfectly legal, until the surprise came from the 
highest court of appeal. These circumstances all tended to 
intensify the demoralization to business interests when the 
certainty was revealed. 



CHAPTER XXIII. 

THE LAWS RELATING TO TRUSTS, CORPORATIONS, AND 

RAILROADS. 

A better administration of these laws needed. — Safeguards of corpora- 
tions, and a comparison of ours with those of foreign countries. — 
The railroad situation and the Supreme Court decision. — Views on 
the subject. — The pooling question and business interests. — A new 
law to regulate railroad rates and to define a violation of railroad law 
indispensable. 

IN so far as the laws on the statute book are sufficient to deal 
with any abuse that corporations or trusts may be guilty of, 
the question resolves itself into one of execution or of enforcing 
the law ; and upon the necessity of this in relation to all business 
concerns in the management and profits of which more than 
one person is interested, I have always insisted that the terms 
of the charters of corporations should be fully complied with, 
and that means of a public official character should be resorted 
to for the purpose of compelling such compliance. 

In some foreign nations matters relating to corporations seem 
to have better safeguards thrown around them than here. 
France, Germany and Belgium are all noteworthy in this respect, 
and England also could impart to us some useful lessons learned 
in the school of hard experience since the South Sea Bubble 
and the Mississippi Scheme. The rule regarding paid-up capi- 
tal is more strictly adhered to abroad, and, in this respect and 
other matters of administration, New York State lags behind 
several other states, notably Massachusetts. I see that since 
the famous court decision in the Trans- Missouri case treated in 
the preceding chapter much emphasis has been laid on this 
vital point of administration ; and Mr. V. H. Lockwood and the 

169 



lyo THE WALL STREET POINT OF VIEW. 

Hon. Perry Belmont, both very close reasoners on this subject, 
have dissected and laid bare the insidious defects of the ad- 
ministration of existing laws in a way that should commend 
itself to all lovers of justice and equity. 

Mr. Belmont in his very elaborate and pithy essay of twenty- 
five pages in the North American Review for April, 1897, dwelt 
at some length on the conflict of opinion in the United States 
Supreme Court arising out of state laws regarding railroads and 
other corporations ; and he finally arrived at the conclusion that 
congressional legislation is absolutely necessary to settle the 
pending trouble. 

The precedents which Mr. Belmont cites are somewhat 
unique as well as important in this discussion, and I regret that 
space will not permit a full quotation, but I insert two para- 
graphs which illustrate his sharp, legal, and strictly logical 
method of drawing conclusions : — 

" Although the court has, by the narrow majority of one, decided 
that the law of 1890 covers common carriers, and has adjudged the 
comprehensiveness of the word ' every' before the word ' contract,' 
yet the published conflicting opinions have exhibited such evidence 
of exhaustive debate in the consultation, if not of animated feeling, 
between the judicial disputants that there seems little hope of a 
change of vote on reargument, and another consultation — the mem- 
bers of the court divided on a question of law, not of fact. There- 
fore the question now at issue is one for Congress. 

"There are two new and important considerations confronting 
the country. On a first superficial view it is not easy to discover 
why it should be that if railway directors are really competent — if, 
as the law demands, they really direct in prescribing rates ; if they 
do not abandon the work and illegally delegate it to freight agents 
— the railway corporations cannot achieve, without formal agree- 
ments with each other, the thing they have heretofore done by 
agreements now condemned by the court. 

"The other consideration is that if it shall now be seen that 
organized private capital is not, by its boards of directors acting in 
corporations, capable of reasonably and safely conducting interstate 
railway transportation, aided by such help in administration as an 
energetic Interstate Commerce Commission can give, then socialism 



THE LAWS RELATING TO TRUSTS. 171 

will be heard in an attempt to show that only organized political 
government can do the work, as it now does in so many European 
countries, and as the Populists insist must be done in the United 
States, by government ownership of railways, telegraphs, telephones, 
and other agencies in public use." 



It is not amiss to call attention here to the operations of 
these great combinations of capital, the development of which 
seems to have become inseparable from modern business 
methods, and which are in common parlance erroneously 
designated as " trusts." 

To state the case in plain and simple terms, the object sought 
to be attained is to put various interests belonging to different 
parties together so as to form a large concern represented by 
stock capital without personal liability, having in view a reduc- 
tion in expenses, greater efficiency, production on a larger 
scale, and the realization of greater profits without advancing 
the price. When a number of small individual plants are thus 
united for a common object, under efficient official management, 
the expenses are materially cut down. With the increased 
capital which this method admits, better machinery is secured, 
with better results in meeting foreign competition, which adds 
largely to this country's exports. In this way this country has, 
during the past ten years, increased to an immense extent its 
ability to compete successfully with Great Britain and other 
European countries. 

Now, the great and underlying principle that has put it in 
our power during the last decade to make such an unprece- 
dented advance in a department of commerce from which we 
were generally supposed to have been almost excluded, is that 
of the much maligned combination of capital. Without such 
means as we possess (despite much ignorant hostility) of aggre- 
gating capital, there could have been no such progress as 
statistics clearly demonstrate. 

People who take a narrow view of the subject say that the 
system throws men out of employment. To my mind it is 
evident that there must have been far more money spent in 



172 THE WALL STREET POINT OF VIEW. 

wages when the manufactured exports were $182,000,000 than 
when they were only $78,000,000 ten years previously. More 
than double the value of material by nearly $300,000,000 
worth, certainly could not be moved by a less number of men. 
It probably required more than half as many more, namely 50 
per cent. ; and during this period labor itself has increased only 
25 per cent., thus leaving the workman better off than before 
the combinations began to make much progress in the improve- 
ment of machinery. 

It seems unnecessary to go over much more of the ground 
in detail, as this example very clearly and amply illustrates 
the principle. 

Can anybody imagine that the railroads could employ an 
army of 800,000 workmen at good wages and that T ^ part of 
a cent per ton per mile would make the difference between 
dividend and no dividend to certain prosperous roads, if the 
principle of combination were not worked extensively in the 
railroad industry? As similar arguments apply to other indus- 
tries with equal cogency, I consider it unnecessary to multiply 
examples, as any one can do so for himself simply by opening 
his eyes, looking over the industrial field past and present, 
coolly reflecting on the situation, and without permitting politi- 
cal prejudice or newspaper sensationalism to cloud his reason 
or distort his common sense. One of the results inseparable 
from combinations, no matter how selfish the promoters may 
be, is that they make everything which they produce cheaper 
to the consumer than it possibly could be without their exist- 
ence ; and the larger the combination, as a rule, the better and 
the cheaper is the consumer served. It is only during the brief 
transition period of the change from the separate concerns to 
the combine that wage earners suffer. After that they are 
better off and labor is more fully employed, usually at higher 
wages. Many of the smaller concerns that go into the com- 
bines and obtain very profitable remuneration for their proper- 
ties would otherwise become bankrupt. 

The fact that a reduction in the price of a manufactured 
article invariably stimulates consumption needs no more dem- 



THE LAWS RELATING TO TRUSTS. 173 

onstration than that the inflexible law of supply and demand 
disposes of any fear as to arbitrary advances in price. 

The chief good achieved by the so-called " trusts " consists in 
the power and facilities which they possess of making almost 
everything of use and desirability cheaper to the consumer 
than it could possibly be by any other means. During the 
last two decades the staple articles of commerce in general 
have been reduced to the consumer from 15 to 50 per cent. 
If the trust were an octopus, as has often been unthink- 
ingly asserted, these large profits, instead of being divided 
among consumers, would be appropriated by the trust. 

The most important contributors to this great desideratum 
on behalf of the consumers have been the railroad corpora- 
tions, frequently regarded as each a trust in itself. And here 
it is appropriate to remark that these corporations, as a rule, 
above all others least deserve to have any odium attached to 
them, for it has chiefly been through them that products of 
every kind have fallen so much in price, largely in consequence 
of the reduction in freight rates from 3 cents per ton in 1870 
to about .805 at the present time. 

If the railroad corporation or trust were an octopus it would 
have held this important item of nearly two cents a ton within 
its greedy tentacles, thus realizing many hundreds of millions 
during the thirty years in question, and a very large amount in 
the years between the former period and the invention of the 
locomotive. 

One of the most difficult things connected with the whole 
abstruse and vexed question of trusts is the definition of the 
term. So far as anything approaching a clear idea of a trust 
can be gleaned from the Sherman Act of 1890, which has given 
so much rise to controversy, it may be defined, according to 
the author of the bill, as "a contract in restraint of trade 
between the different States." 

The application of this definition gave rise to a good deal of 
dissatisfaction and controversy at the time of the decision of the 
United States Supreme Court in the case of the Trans-Missouri 
Traffic Association. The knotty point assumed in this matter, 



174 THE WALL STREET POINT OF VIEW. 

as in that of the Chicago warehouse affair, was that every busi- 
ness forming a part of interstate commerce and affected with 
public interest should be subject to the legislation and control 
of Congress. 

To show how poor a chance the general public has of under- 
standing the rendition of this Sherman Act, the division of 
opinions of the Supreme Court in that case will amply illustrate 
the point in question. There were two issues before the Court, 
one being as to whether the Sherman Anti-Trust Law applied to 
railways, and the other related to the nature of agreements in 
restraint of trade, partial as well as general. 

The Court was divided, the decision being rendered by the 
casting vote of Chief Justice Fuller, who, with four others — 
Justices Harlan, Brewer, Brown, and Peckham — held that the 
statute applied to railroads and included every agreement in 
restraint of trade which might be entered into by any company, 
corporation, or person. The opinion, which was about half as 
long as the latest novel or law book, was written by Justice Peck- 
ham. The minority opinion, in which four of the nine Justices 
coincided, dissented from the majority on both issues. They 
held that common carriers, being already under the regulation 
of the Interstate Commerce Law, were not within the purview 
and were not to be held within the operation aimed against 
trusts. They maintained that the statute can be rightly con- 
strued as applying only to general and unreasonable contracts 
in restraint of trade, and not to reasonable contracts only par- 
tially having that effect. They also held that to extend its 
operations to all contracts and agreements indiscriminately 
would not only be destructive of the freedom of contract and 
of trade, but against the whole current of judicial authority. 
The opinion goes on to say : " The plain intention of the law 
was to protect the liberty of contract and the freedom of trade. 
Will this intention not be frustrated by a construction which, if 
it does not destroy, at least gravely impairs both the liberty of 
the individual to contract and the freedom of trade? If the 
rule of reason no longer determines the right of the individual 
to contract, or secures the validity of contracts upon which 



THE LAWS RELATING TO TRUSTS. 175 

trade depends and results, what becomes of the liberty of the 
citizen or the freedom of trade ? Secured no longer by the law 
of reason, all these rights become subject, when questioned, to 
the mere caprice of judicial authority. Thus, a law in favor of 
freedom of contract is so interpreted as gravely to impair that 
freedom. Progress and not reaction was the purpose of the 
act of Congress. The construction now given to the act dis- 
regards the whole current of judicial authority. The remedy 
intended to be accomplished by the act of Congress was to 
shield against the danger of contract or combination of the few 
against the interest of the many and to the detriment of free- 
dom. The construction now given strikes down the interest 
of the many to the advantage and benefit of the few." 

The following comments were entirely to the purpose : — 
" The interpretation of the statute, which holds that reason- 
able agreements are within its purview, makes it embrace every 
peaceable organization or combination of the laborer to benefit 
his condition, either by obtaining an increase of wages or a 
diminution of the hours of labor. It is, therefore, absolutely 
true to say that the construction now adopted which works out 
such results not only frustrates the plain purpose intended to 
be accomplished by Congress, but also makes the statute tend 
to an end never contemplated and against the accomplishment 
of which its provisions were enacted." 

In the light of practical events it will be observed that the 
Sherman Law has a very plausible but at the same time a very 
seductive and deceptive reading. The pretence is that it is 
directed against " unlawful restraints of trade," while it really 
intermeddles with agreements of a lawful character indispensa- 
ble to the equitable distribution of profits among the members 
of a company or corporation. The execution of the law thus 
imposes hardships and suffering of the most tyrannical char- 
acter upon innocent people, as illustrated in the Trans-Missouri 
case, by the interpretation of the law by which it is made a 
crime for people united in the same kind of business to have 
a fair division of their honest and equitable profits. A large 
amount of those profits is distributed among the people at 



176 THE WALL STREET POINT OF VIEW. 

large for the various necessaries of life, through grocers, bakers, 
clothiers, landlords etc. Thus we see that a trust or combine 
of this description, instead of being an octopus or greedy 
monopoly, assumes the character of a most beneficent agent 
of distribution in every walk of life. 

Arbitrary laws, after the manner and spirit of the Sherman 
Act, are calculated to rob people of their vested rights, and are 
clearly in violation of that clause of the Fifth Amendment to 
the Constitution which states that " No person shall be deprived 
of property without due process of law, nor shall private prop- 
erty be taken for public use without just compensation." 

The practical effect of this wrong was clearly set forth in the 
famous Nebraska Maximum Freight Rate case, in which it was 
shown that the reduction effected in freight rates by the legis- 
lature amounted to about thirty per cent, of the entire rate as 
fixed by the company upon an equitable paying basis. The 
case was brought into the United States Supreme Court to 
test the validity of the law passed by the Nebraska Legisla- 
ture of 1893, prescribing the maximum freight rate within the 
State of Nebraska. It has been estimated that if the law of 
Nebraska were carried out in this instance, its execution 
would amount to a practical confiscation of the railroads in 
that State. 

It would seem to be a most desirable thing, calculated to 
disarm prejudice and at the same time to conserve public 
right, that the several States should unite in passing laws requir- 
ing these great industrial combinations to submit periodical 
statements of their financial condition and operation. Such 
legislation should be in the line of that governing the railroad 
corporations ; and in the case of corporations transacting busi- 
ness in several States, supervision could be very properly 
lodged with the present Interstate Commerce Commission by 
enactment of a national law. The industrials cannot expect to 
gain full public confidence until they furnish reliable annual or 
semi-annual reports of their operations and conditions. In view 
of the enormous powers and advantages which they hold, the 
public has a right to this information ; and legislation against 



THE LAWS RELATING TO TRUSTS. 177 

the trusts could take no wiser or more effective form than 
an enforced publicity. By such means the public would be 
protected against monopolistic abuses, investors would be saved 
from fraud, and the industrials themselves would gain through 
commanding the confidence which many of them now lack. 

One thing, which seems to me very defective about legisla- 
tion in regard to trusts and corporations, is that we are left very 
much in the dark as to what acts constitute a violation of the 
law. This part of the statutes is so indefinite that the judi- 
ciary has quite too wide a range afforded it for definition ; and 
this defect becomes especially marked when a judge without 
practical business and financial knowledge attempts to adjudi- 
cate upon a case, for a clear understanding of which such an 
equipment is indispensable. Knowledge of this character 
should be better represented on the Supreme Bench, and it is 
not so difficult to procure at the present time as it has been in 
the past, for many lawyers now get a fair business and com- 
mercial education, and certain members of the United States 
Bar all over the country have in the last few years organized 
themselves into a special association for the promotion of the 
study and practice of commercial law. I believe many of the 
best lawyers will agree with me when I say that this educational 
defect was clearly visible in the majority opinion of the Supreme 
Court in the Trans- Missouri case, and I say it without any dis- 
position to detract from the great ability of the learned mem- 
bers of that court. 

This kind of training is seen to advantage wherever it is 
brought into the settlement of questions involving a combina- 
tion of law and business calculations. The point was recently 
illustrated in an interview of a daily newspaper with the Hon. 
Chauncey M. Depew, in which he spoke of a case where free 
railroad competition had sway, and a merchant in a small town 
who gave all his business to one road on exclusive terms was 
enabled through a special rate to monopolize the business of 
that town and freeze out the other merchants in the same line. 
If pooling had been permitted under proper surveillance and 
regulation, this action in restraint of trade could not have hap- 



178 THE WALL STREET POINT OF VIEW. 

pened, and a lawyer who was expert in commercial matters 
could have warned the victims of the impending danger. 

The want of a rule to follow in defining what is an act 
involving this so-called crime of " restraint of trade " was con- 
spicuously illustrated in the abortive attempt of the Lexow Com- 
mittee to discover illegality in the organization and workings of 
certain corporations. In its report it floundered around in a 
very ridiculous fashion, aiming fruitlessly at some definite 
charge to prefer. 

Some organization akin to the Massachusetts Commission, 
now so generally referred to in the periodicals, might be a good 
medium for helping to enforce the law in cases of alleged delin- 
quency, and for defining more clearly what a violation of the law 
is, so that a person or a company could know when an illegal 
act had been committed ; for these are things of which every- 
body but the Supreme Court appears to be ignorant. The 
District Court and Circuit Court of Appeals are equally in 
the dark with all who may have anything to do with the ques- 
tion, and who may be liable to be involved in the commis- 
sion of an indefinite and undefined crime punishable by fine of 
585000 and a year's imprisonment. 

There are sufficiently urgent reasons why Congress should 
intervene in a matter of such paramount importance and take 
a short cut toward ending the danger by the adoption of a law 
or resolution to the effect that the Sherman Anti-Trust Law shall 
not apply to the railroads. This would at once end the troubles 
arising out of the decisions of the Supreme Court in the Trans- 
Missouri case, and prevent any such difficulties in the future ; 
while the question of devising new legal regulations authorizing 
pooling, revising the relations between the roads and the Inter- 
state Commission, and for holding destructive competition in 
check, could be easily left over for more mature consideration. 
The question is a great, complicated, and difficult one \ and its 
final solution by legislative enactments can be reached only by 
calm and more or less protracted deliberation. 

Upon the whole, it is reasonable to expect that the more 
exciting phases of this question have been passed. Time is 
now ripe for readjustment. 



CHAPTER XXIV. 

CURRENCY LEGISLATION. 

Beneficent effect of the New Currency Law. — Our improved credit shown 
by our new two per cent, bonds at a premium. — Gold now our unequivo- 
cal standard of value. — Baneful effects of previous uncertainty as to 
our standard. — Advantage to trade and to money-movement of the 
extension of national banks. — Good effect of the gold enactment on 
the value of American securities abroad. — The surprising and dazzling 
era of business prosperity into which the world is entering. 

BY far the most important and most beneficial act of finan- 
cial legislation since the resumption of specie payment 
has been accomplished by the recent passage of the so-called 
New Currency Bill. Its provisions are calculated to prove of 
great aid in maintaining the even tenor of prosperity, through 
a stability of the bases of credit, and hence, of necessity, a 
stability of credit itself. No country, be its resources never so 
vast, can develop these resources even through domestic com- 
merce, without the underlying guaranty of a perfectly sound 
financial system upon which credit may be established, and 
without which latter trade languishes. Credit is the life of 
the individual, of commerce, and of the country. Therefore, 
I say that in placing the national financial system upon an 
absolute gold basis, the Fifty-sixth Congress has placed to its 
own credit, and that of the entire administration, a very great 
sum of national prosperity, to be enjoyed by them and by 
the country at large for many years to come. 

The first and immediate result has been seen in our ability 
to refund a considerable portion of the national debt at a two 
per cent, interest-bearing note, thereby effecting a saving of 
many millions a year in interest. Moreover, these two per 
cent, bonds command a premium in the markets of the world, 

179 



180 THE WALL STREET POINT OF VIEW. 

placing the credit of the government of the United States in 
the first rank. 

Our unequivocal standard of value is now that of all the 
great civilized nations. To be sure, so far as the actuality 
went, our wise Secretaries of the Treasury have always practi- 
cally maintained our finances upon a gold basis ; but hereto- 
fore there have always been the elements of uncertainty and 
apprehension, the possibility of different and erroneous inter- 
pretations of the duties of the Secretary of Treasury. Now, our 
declaration of faith, as put on the statute books in the year of 
grace 1900, leaves no longer any ground for distrust. 

It will be well remembered how, in times past, upon the 
least indication of financial agitation, gold has been withdrawn 
from this country in enormous quantities. In another chapter 
I have already referred to the disastrous effects which were 
brought about in very large measure by the depletion of the 
Treasury's stock of gold, this tremendous drain being the direct 
result of the fear that, through the pernicious effects of the 
nonsensical and unsound 16 to 1 silver agitation, we were 
drifting more or less rapidly, but none the less surely, to a silver 
basis. The reason for such great apprehension of danger is 
not far to seek. Our securities had been held in enormous 
volume by Europe, which had paid us for them in gold, invest- 
ing its money in good faith as to its security. The inevitable 
result of a threat, however remote, that when it came to taking 
back these securities by either purchase or redemption, we 
would pay for them in depreciated silver, was an outpouring 
upon us in vast quantities of the stocks and bonds. The accom- 
panying panic and its direful train of disasters before temporary 
legislative relief came, are matters which have been fully treated 
elsewhere in these pages. 

But we may cheerfully turn away from such contemplation, in 
the assurance of being safeguarded from any further danger 
from that source. American securities may now be held in 
foreign countries, without any misgivings as to their repayment 
in the best money of the world. And herein lies a great pro- 
moting factor in stability. The movements of gold will be left 



CURRENCY LEGISLATION. 181 

free to the natural influence of supply and demand. The 
current will simply flow where money may be most needed at 
the time, or where it may command the best interest rate. 
Consequently, hoarding of the yellow metal is a thing of the 
past. Gold is the most timid commodity in the world, but now, 
when it seems reasonably sure it will not be driven out of the 
country by an overwhelming deluge of degraded money, it will 
not hide away in strong boxes and vaults, but will come forward 
to give its invaluable assistance in the regulation and adjustment 
of the exchanges inseparable from business. 

The extension of the limit of bank circulation to the par value 
of government bonds held in Washington as security, is a wise 
provision of the bill under discussion. While emphasizing the 
excellent credit we enjoy as a nation, it permits a considerable 
increase in the volume of money in circulation, really necessary, 
and at the same time perfectly safe in its nature, being a natural 
and gradual expansion and not an inflation of the currency. 

I look favorably as well upon the provision for the founding 
of national banks upon smaller capitalization than hitherto 
required. I think that one result of this will be the establish- 
ment of a large number of these institutions in a profitable field 
of action, namely, at smaller points throughout the great cotton 
and grain-growing districts. The relief that this would afford 
the large money centers of the country is needed. The periods 
of crop movement are invariably periods of disturbance and 
stringency in the money markets. If banking facilities are 
brought nearer to these vast agricultural sections, and more 
widely distributed through them, a very great measure of the 
burden of crop movements will be lifted from the banking insti- 
tutions of the East. Here again we observe another element 
tending toward the stability of trade. Our legislators have 
wisely refrained from interference with the greenback legal 
tenders, which are a necessity from the best economic point of 
view. 

Taking the Currency Bill all in all, therefore, we, as a nation, 
have good cause for self-congratulation. Our credit, based 
upon a sure foundation, is the best in the world. Confidence 



1 82 THE WALL STREET POINT OF VIEW. 

is an established institution in this country, and whoever may 
assail it should receive short shrift from every thinking man, be 
he capitalist or day laborer. 

There has been a very considerable discussion of this currency 
question within the past few years, but more especially during 
the last presidential campaign. The people have become 
educated to a marked degree in the rudimentary principles 
of a sound monetary system, and it hardly seems likely at this 
juncture that this knowledge will permit any other course on 
their part than a continuance in power of the great political 
party through whose instrumentality so much of substantial 
benefit to the country has been achieved. 

The effect of the placing of this country on a permanent 
gold basis by national enactment, has not yet been fully 
appreciated in Wall Street, as it has been amongst the great 
financiers and capitalists of London. American securities have 
a backing now for intrinsic worth such as they have never had 
before, through the status which the adoption of the gold 
standard has given them, of which there can be no revocation. 
The attention of the world will be called to American securities 
more forcibly than ever before, from this time forth, making 
them more sought after for permanent holding. Now that the 
misgivings as to the future of our money have been settled, the 
important factor of a large commercial balance in our favor will 
prevent the return of such misgivings. Our present large rail- 
road earnings will inevitably encourage the making of future 
investments on a large scale in this country, at the termination 
of the South African war. 

The present wonderful showing made by American railway 
and industrial corporations is only a foreshadowing of the 
immense activity to come. The entire world is entering upon 
an era of commercial progression and prosperity that will far 
surpass all existing records. National conquests will in time 
be made by the weapons of commerce rather than by those of 
war. The great increase in the gold product of the world is 
the moving power, and the faster the precious metal is brought 
up from the bowels of the earth, the greater will be the impetus 



CURRENCY LEGISLATION. 183 

of business ventures and developments. The future will be 
brilliant in inventions and discoveries, and in the advancement 
of gigantic business enterprises, without limit as to sphere. We 
are to witness a race of mankind for supremacy in the world's 
markets. The " open door " will be the policy of all the great 
powers. The completion of the trans-Siberian railway points 
to the development of the heretofore almost unknown resources 
of Russia. Upon the ending of the Transvaal War we shall 
see a tremendous sweep of civilization into Africa, which means 
the opening up of its well-nigh fabulous resources. Who can 
gainsay that the results will be marvelous? There is not a 
corner of the globe where they will not be felt. These are the 
prevailing conditions in this closing year of a wonderful 
century. The prospect for the century to come is indeed a 
dazzling one. 



CHAPTER XXV. 

PROPHETIC VIEWS ON SILVER. 

A review of the subject prior to the great presidential campaign which re- 
sulted in the maintenance of the gold standard. — Bryan's great coup 
at the Chicago Convention in 1896, which he carried by the power of 
plagiarism from the old play of "Jack Cade." — The deadly parallel of the 
two comedians. — A decent respect for old plays to be encouraged. — 
The theory of an international agreement discussed, and the theory of 
national free coinage of silver shown to be erroneous and fraught with 
national danger. — The effect upon international trade would be disas- 
trous. — A plan proposed for an international currency that would greatly 
facilitate business operations in all channels of trade and commerce, and 
vastly aid the progress of prosperity in this country. — What is left of 
the silver issue to-day. 

SENATOR STEWART is reputed to be the principal author 
of the bill which is said to have demonetized silver, by 
providing for the coinage of the trade dollar which Mr. Stewart 
imagined would create an immense foreign demand for silver 
in China, Japan, and India. It did not, however, and Senator 
Stewart has been unhappy ever since for being chiefly instru- 
mental in the passage of that bill, and has tried very hard to 
fasten the responsibility for it upon the wicked and avaricious 
gold monometallists. 

This piece of legislation in 1873-74 opened the door for 
further action on the part of Congress, and accordingly that 
honorable body, on July 22, 1876, framed a measure in the shape 
of a joint resolution of both Houses, limiting the coinage of the 
trade dollar to export demand, and repealing its legal tender 
quality in the United States. It never was demonetized, except 
in this sense and until the time here stated, which was three 
years after the alleged "crime of 1873." 

Provision was made by the act of February 19, 1887, to re- 

184 



PROPHETIC VIEWS ON SILVER. 185 

ceive the trade dollar, "if not defaced, mutilated, or stamped," 
at the office of the Treasurer or any Assistant Treasurer of the 
United States, in exchange for a like amount, dollar for dollar, 
of standard silver dollars, or of subsidiary coin of the United 
States, to be melted and recoined. There were 35,965,924 of 
the trade dollars coined in all, but I have no account of the 
number returned to the Treasury ; and I should state that these 
trade dollars were not counted in the silver purchased by pro- 
vision of the Bland and Sherman Acts. 

This is the history, in brief, of what is indignantly called the 
" crime of 1873 " by the silverites, but which was not consum- 
mated until 1876, and for which eminent silverites were them- 
selves mainly responsible, being accessory to the " crime " both 
before and after the fact. The " crime " was really a free-coinage 
act and remained so until 1876, so there was no intermission 
authorized by law in the free coinage of silver from the estab- 
lishment of the mint in 1792 until 1876 \ and from the former 
period up to 1873, an interval of eighty-one years, under this 
free-coinage law, there were only 8,000,000 silver dollars coined 
in the United States. It must be admitted that during this 
time the silver dollars of several other nations, notably those 
of Mexico and Spain, were freely circulated in the United 
States ; but there is no means of procuring statistics as to the 
volume of the foreign currency. 

It is said, though history is not very clear about it, that by 
order of President Jefferson silver coinage was discontinued for 
many years • but Jefferson never had any authority to issue 
such a mandate, and, if it ever was issued, it was a dead letter. 
The total number of silver dollars coined up to December, 
1893, the Limited Coinage Act having been in existence from 
the passage of the Bland Bill in 1878, was 427,304,000. So, 
if it is volume of money that is required, it would appear that 
the restricted coinage of silver is better adapted to reach that 
end than free coinage. 

In the same connection, and as a vital part of this subject, 
it is necessary to refer to the lady who, while an employee in 
the Treasury, wrote a book in which she charged Ernest Seyd 



1 86 THE WALL STREET POINT OF VIEW. 

of London, an agent of the Rothschilds, of having been in this 
country at the time the "crime of 1873 "was committed, and 
that he touched the " itching palms " of some of the assassins 
of free silver with a liberal amount of Rothschild's gold. It is 
well authenticated that Mr. Seyd was in London at the time 
and had not been in this country for more than a dozen years 
prior to the agitation over the silver question, and there are 
letters of his on record advising certain statesmen on this side 
not to think of demonetizing silver. Seyd was an uncompro- 
mising bimetallist, and an able writer and author on the subject. 
Yet, with all this evidence easily procurable, the silverite ora- 
tors took as their text the error in that lady's book and were 
particularly noisy on the strength of it, and they will, I have no 
doubt, do so again. That author is dead, I believe. She wrote 
simply from hearsay evidence. 

Let us now go to Chicago and pay our respects to Mr. Bryan 
and a few of his political friends. As I have already intimated, 
the doleful state of the country arising from the Cleveland 
panics had caused the people to look around for a change 
in the Executive as well as in the party of which he was the 
chosen chief; and thus Mr. Bryan and his colleagues were en- 
abled to capture the Democratic machine at Chicago in 1896. 
The fiery eloquence of the " Boy Orator," coupled with the 
revolutionary enthusiasm of a number of his followers, took the 
convention by storm, when the machine politicians were off 
their guard. It was a kind of historic repetition of a scene in 
English politics, of which Disraeli said in his epigrammatic way 
that Sir Robert Peel and his party caught the Whigs bathing 
and stole their clothes. 

But the " smartest" thing that Bryan did at Chicago was at 
the close of his peroration, when he delivered with intense fer- 
vor and deep emotion, as if it were the inspiration of the 
moment, a portion of the metaphorical speech of an English 
low comedian in the old play of " Jack Cade, or The Bond- 
man of Kent," which drew vociferous applause at Chicago, 
almost as loud as that from the "gods" in Drury Lane and 
Sadler's Wells, generations ago. 



PROPHETIC VIEWS ON SILVER. 187 

I quote verbatim from both the modern and the ancient 
actor, and leave the inference to the reader in the discovery of 
resemblance. I quote the last paragraph of Bryan's peroration 
in full, so that his masterly art can be the better appreciated. 
After making the modest claim that the issue of 1896 was the 
issue of 1776, he concluded as follows : — 

" Therefore we care not upon what lines the battle is fought. If 
they say bimetallism is good, but that we cannot have it till some 
nation helps us, we reply that instead of having a gold standard be- 
cause England has, we shall restore bimetallism, and then let England 
have bimetallism because the United States has. (Applause.) If 
they dare to come out in the open and defend the gold standard as 
a good thing, we shall fight them to the uttermost, having behind 
us the producing masses of this nation and the world. Having 
behind us the commercial interests and the laboring interests, and 
all the toiling masses, we shall answer their demands for a gold 
standard by saying to them : ' You shall not press down upon the 
brow of labor this crown of thorns. Yon shall not crucify mankind 
upon a cross of gold.'' " 

The words in italics are dovetailed in the end of that pero- 
ration like a piece of mosaic, and do great credit to Mr. Bryan's 
editorial capacity. Uttered with dramatic effect, they were 
madly and unanimously cheered, the convention went wild, 
and nothing could restrain it until it nominated the orator by 
unanimous acclamation. It was difficult to succeed in obtain- 
ing even a complimentary mention for other prominent mem- 
bers of the party. The convention had no ears for any name 
but that of Bryan. 

Now let us examine the "crown of thorns" and " mammon's 
cross" in "Jack Cade." The dramatist puts the following 
language into the mouth of the hero of the comedy, just as 
Bryan made himself the hero of the serio-comic drama at 
Chicago : — 

" Upon the brow of toil thou shalt not place the crown of 
thorns, and the bondman of the soil shall not be crucified upon 
mammon's cross." 

The resemblance is too striking to have been the result, as 



188 THE WALL STREET POINT OF VIEW. 

sometimes happens, of two men of similar modes of thought, 
thinking alike and using similar language. The only material 
changes made by the modern speaker are that he uses the 
word " gold " instead of " mammon," and the word " mankind " 
instead of the words " bondman of the soil." The construction 
of the clause in which the words " crown of thorns " occur is 
simply changed by transposition, but the plagiarism is manifest. 

One moral to be drawn from this is, — Never despise an old 
play. It may make your fortune. Wherever you see one on a 
second-hand book stall, pick it up and drop your five cents for 
it, even if it should be the price of your car-fare home. It 
may not enable you to reach the presidential chair, but the old 
play, if it contains a good stock of epigrams, may obtain for 
you a lecturing engagement for a year at $1000 a lecture. 

I do not take any credit to myself for being somewhat pro- 
phetic on the result of the silver agitation as it happened in 
the change of national administration in November, 1896, for I 
believe the consequence was easily foreseen by all persons 
familiar with the general principles of finance and currency and 
unbiased by political affiliations. It may not be uninteresting, 
however, to those of my readers who followed up the great dis- 
cussion on that subject, to know what I thought about the mat- 
ter at the period prior to the time when the disputations had 
arisen to fever heat. In September, 1892, I wrote the follow- 
ing, which was published in The Independent : — 

" The outworking of the world's pregnant silver problem is rapidly 
nearing the phase of finality. All nations are agreed as to the 
transcendent importance of the question, and that assent finds a 
fitting expression in the prospective assembling of representatives 
of the leading governments to consider whether any concerted means 
can be devised to stay the drift toward the common demonetization 
of the white metal. Nothing short of an international treatment can 
effectually deal with the question ; and if the conference to assemble 
next month closes without devising radical remedial measures, the 
rehabilitation of silver may be abandoned as a hopeless case, and a 
currency revolution the world over may prove to be the result. 

" Any expedient short of a compact between a majority of the lead- 
ing nations to coin, upon a common valuation and without restriction, 



PROPHETIC VIEWS ON SILVER. 189 

all silver brought to their mints, must fail to accomplish anything 
beyond a paltry and transient alleviation of the depreciation of 
silver bullion. It would be premature to prophesy, in advance of 
the conference, whether any such radical conclusion will issue from 
its deliberations. It appears, however, entirely safe to assume that 
neither England nor Germany will commit themselves to free 
coinage ; and the chances of any hopeful results, therefore, narrow 
down to the possibilities of the old Latin Union nations combining 
with the United States and British India to maintain the unrestricted 
coinage of silver, either on the basis of the present valuation of 15 J 
to 1, or upon some lower valuation. It would not be easy to over- 
estimate the force and influence of such a combination ; and con- 
sidering the extreme gravity of the alternative course of allowing 
silver to drift without any regulating force, many practical observers 
are likely to regard such an expedient as well deserving an earnest 
trial. So deeply, however, has confidence in the possible stability of 
silver been shaken, and so impressed are European statesmen with 
the expediency of evading all the risks attending silver money by put- 
ting their respective countries upon the exclusive gold basis, that 
there is little probability that a limited international agreement of this 
nature may be realized. 

"With so much uncertainty about the outcome of the forth- 
coming conference, it may not be deemed premature to consider 
what course should be taken in the event of a barren issue of its 
deliberations. Few practical financiers would be disposed to en- 
courage further tinkering and delay. With very good reason it 
would be argued that, if the dangers attending the present position 
of silver are not sufficient to alarm Europe into undertaking its 
treatment in earnest, it is hopeless to dream that the great powers 
will at some future time come to appreciate the necessity for action. 
The failure of the conference would most probably be followed by a 
further depreciation of silver. That debasement might but too easily 
produce world-wide despair of the metal being retained in use for 
any function beyond that of a subsidiary currency ; and it is not diffi- 
cult to foresee what would be the result of such a surrender of hope. 
The disposition to discard silver would become almost universal. 
The metal that, under wiser counsels, might have been restored to 
coordinancy with gold, would be thrown upon the market while gov- 
ernments, banks, and individuals were shunning it ; and what, under 
such conditions, might be the extent of its further depreciation ? 

" In such a crisis, the United States could have but one safe alter- 
native. To continue the coinage of silver would be the wildest 



190 THE WALL STREET POINT OF VIEW. 

insanity. Fortunately our stock of the nobler metal is large enough 
to enable us to put our currency system upon the simple gold basis, 
and that should be our first and instant duty. Our silver should be 
withdrawn as fast as the public convenience might permit, and its 
place filled by correspondingly augmented issues of bank notes ; but, 
so long as our silver was kept in circulation, it should be held equal 
to gold in the payment of debts. Any policy short of this would 
expose us to the loss of our gold and to consequent drifting into 
an exclusively silver currency. For in the contingency supposed, 
every European nation, and most probably India also, would seek to 
protect itself by accumulating the yellow metal. 

" However impossible it might be to get gold enough to put the 
world at large upon the gold basis, yet every nation would not the 
less become a competitor for that metal, and all sorts of means 
would be employed to deplete our large stock and to control our 
current production. Moreover, it is never to be forgotten that we 
stand exposed to such a drain beyond all other countries, from the 
circumstance of our immense foreign indebtedness. Probably two 
billions of our securities are held in Great Britain and on the Conti- 
nent ; and to allow room for any doubt of our ability to pay those 
obligations in gold or its equivalent, would be to invite a return of 
these foreign-held stocks and bonds to an extent sufficient to trans- 
fer to Europe the bulk of our supply of gold. 

" It is impossible to exaggerate the great gravity of this factor in 
the situation. It is not easy to say what is impossible in the way 
of financial disaster when the sensitive fears of a large mass of 
investors are aroused. Our past trifling with silver — though but 
a transient incident of debased politics — has proved sufficient to 
bring home some $150,000,000 of securities, thereby causing an 
export of over $100,000,000 of gold which otherwise would have 
been kept in the country. What, then, might be expected if we 
showed any inclination toward a policy that seemed to threaten 
the payment of hundreds of millions of our foreign debts in silver 
instead of gold ? In view of this danger, it is to the last degree 
imperative that, in the event of the failure of the conference to pro- 
vide for international free coinage, the most prompt and positive 
steps should be taken to afford universal assurance that the United 
States would discard silver, conserve gold, and adopt the single 
gold standard. That being done, we could have nothing serious 
to fear from the failure of the conference ; but any course short of 
that would invite the most serious forms of financial disaster. 

" The situation created by the position of silver very directly 



PROPHETIC VIEWS ON SILVER. 191 

suggests the question whether something cannot be done toward 
economizing the use of gold in international intercourse. The 
extensive use of that metal in the settlement of foreign balances 
is an anomalous waste of the utility of the most potent force of 
finance. It has no justification in necessity ; it is a useless relic of 
a bygone age. The internal exchanges of the several nations are 
settled without the intervention of money, and why should the 
same kind of economy be impracticable in the adjustment of inter- 
national balances? The nation that is debtor this month is cred- 
itor next, and we send millions of gold to England to pay our debts 
maturing in September, when the same cash may have to be re- 
shipped in October to settle England's debts to the United States. 
As the whole commerce between the two nations is conducted by 
means of credits, why should it be difficult to adjust these oscillat- 
ing balances of trade through the use of a suitable form of credit 
instrument ? Gold settlement is so obviously needless, so costly 
and so deranging to the world's money markets, that the only ques- 
tion to be seriously considered is, — What form of instrument would 
be best adapted to supersede cash settlements ? 

"In other references to this matter, I have suggested that the 
leading governments might issue a bond bearing a low rate of inter- 
est and possessing qualities specifically adapting it for international 
transfer. If it should be found impracticable to induce national gov- 
ernments to undertake such an arrangement, or if it were objected 
that political contingencies would make the value of a government 
obligation fluctuating and uncertain, is there any valid obstacle to 
the issue of a suitable credit under other entirely safe and feasible 
auspices? Every financial center of the world has its clearing 
house, or national bank, or community of resourceful bankers, any 
of which contains the raw material from which this international 
currency might be formed. In some countries one of these forms 
of organization might be found most available, and in others an- 
other. In England, France, and Germany, it would probably be 
found most feasible to invest the respective national banks with the 
needful powers of issue, whilst in the United States, the New York 
Clearing House might be induced to perform the function under 
due authorization. The issuers should occupy a status that w r ould 
enable them to command confidence under all possible contingen- 
cies, and should be required to deposit unquestionable guaranties 
against the issues. The notes should bear a low rate of interest 
and be payable on demand upon the makers. The issuer would 
receive cash for the notes, which would constitute an important 



192 THE WALL STREET POINT OF VIEW. 

banking resource the use of which would enable the issuer to pay 
the interest carried on the notes. This interest-bearing quality 
would prevent the notes from being immediately sent home for 
redemption ; and thus, at all the centers of foreign finance, there 
would always be an accumulation of this international currency 
issued in the various nations ; and that fund would be available in 
lieu of so much gold for the settlement of interstate balances.'" 

Again, in September of 1898, I wrote the following : — 

u Some unwelcome surprise is felt at the silver issue again raising 
its head in Western politics. The politicians of that section feel 
impelled to take up the old fad in the absence of other policies that 
would attract public interest. The money conference recently held 
at Omaha showed by the composition and the spirit of its speakers 
that there is still enough of the old free-coinage spirit among the 
politicians to keep up a certain amount of agitation ; and this is 
unfortunate in view ot the distrust which the past excitement has 
created in European investment circles. 

u It is well that this foreign jealousy about our money standard 
is so vigilant, for it is precisely at that point that any attempt to 
force the adoption of free coinage would meet its first check. We 
may prostitute the force of law by compelling our own citizens to 
accept an unstable or depreciated form of money, but we can apply no 
such compulsion to foreign countries. For all that we buy from them, 
they would demand settlement in gold; and if we should drive our 
gold out of the country, then our settlements must be made in silver, 
not at its fictitious face value, but at its true bullion value. On the 
other hand, our exports would be paid for not in gold, but in silver 
at its current rate of depreciation. No country so situated can suc- 
cessfully compete in foreign commerce with nations which pay and 
receive payments in the most stable form of money. 

"To meet this pregnant fact with the empty assertion that we 
can afford to assume a position of independence of foreign com- 
merce is merely to substitute braggadocio and falsehood where hon- 
est argument fails. Even before this revolution could get under 
headway it would be self-overthrown. Before the mania had run 
its course for one month the consequences would be upon us in all 
their force. And what then? Would the country supinely permit 
the ruin to run its unchecked course and wait for the worst possible 
culminations of disaster? Not for a moment. There are some 
follies so monstrous as to be impossible even at the hands of mad- 



PROPHETIC VIEWS ON SILVER. 193 

men. There is always a limit somewhere to the freaks of political 
lunacy; and, in this case, the strait-jacket would be put in use 
before the precipice was reached. The men who control finance 
would see the consequences before the consummation of the act, and 
a clear prospect of the enactment of a free-coinage law would pro- 
duce anticipatory effects which would either prevent the passage of 
the law or bring about its repeal quickly upon its enactment. 

" Men who scientifically and practically understand the destruc- 
tiveness of this scheme, and the effects which the approach of its 
consummation must have upon public feeling, have no fear about 
the agitation beyond the possibility of its bringing us near to the 
verge of an appalling catastrophe. They are satisfied beyond ques- 
tion that, if free coinage could be enacted at all, its duration would 
be but momentary. This view is now so generally understood that 
the silver mania affects but a small minority, consisting largely of 
fanatics." 



CHAPTER XXVI. 

PRESIDENT MCKINLEY'S POLICY AND THE NATION'S 

FUTURE. 

A resume of the policy of the present administration as outlined in the in- 
augural address of the President, speaking for himself and his party. — 
The keynote of his policy is, first, sufficient revenue to run the gov- 
ernment. — Afterward, a commission on the currency question. — The 
wisdom of McKinley's policy in putting revenue and tariff reform before 
the currency. — Revision, but not revolution, of the tariff. — The govern- 
ment to remain in the banking business, but the currency to be taken 
out of politics and remodeled without reducing the volume. — Industrial 
interests and the rights of labor to be guarded against foreign invasion. 

ALTHOUGH President McKinley's inaugural address was 
published long since, it contains much valuable material 
and profound thought, that, more fully elucidated by the prog- 
ress of events, will be highly interesting for many years to 
come. In this chapter, therefore, I propose to make a brief 
r£sum6 of the policy of the President as outlined in his in- 
augural address, especially his financial policy. 

That address was unique in the manner in which it got down 
to the most important business without any preliminaries. The 
President first described the business situation, as he found it, 
in the most succinct terms. After a few introductory remarks, 
he said : — 

" The responsibilities of the high trust to which I have been 
called — always of grave importance — are augmented by the pre- 
vailing business conditions, entailing idleness upon willing labor 
and loss to useful enterprises. 

"The country is suffering from industrial disturbances, from 
which speedy relief must be had. 

" Our financial system needs some revision ; our money is all 
good now, but its value must not further be threatened. It should 

194 



MCKINLEY'S POLICY — THE NATION'S FUTURE. 195 

all be put upon an enduring basis, not subject to easy attack, nor its 
stability to doubt or dispute. 

" Our currency should continue under the supervision of the 
government. The several forms of our paper money offer, in my 
judgment, a constant embarrassment to the government, and a safe 
balance in the Treasury is absolutely indispensable. Therefore I 
believe it necessary to devise a system which, without diminishing 
the circulation medium or offering a premium for its contraction, 
will present a remedy for these arrangements which, temporary in 
their nature, might well in the years of our prosperity have been 
displaced by wiser provisions. 

" With adequate revenue secured, but not until then, we can 
enter upon such changes in our finance laws as will, while insuring 
safety and volume to our money, no longer impose upon the gov- 
ernment the necessity of maintaining so large a gold reserve, with 
its attendant and inevitable temptations to speculation. Most of 
our financial laws are the outgrowth of experience and trial, and 
should not be amended without investigation and demonstration 
of the wisdom of the proposed changes. We must be both ' sure 
we are right ' and i make haste slowly.'' " 

When adequate revenue was once secured, many of the 
financial difficulties, out of which there seemed no easy way 
during the previous two or three years, found their own solution. 
For instance, the necessity for bond sales to replenish the gold 
reserve no longer existed. This was an inevitable result which 
the former administration could never see and which the 
McKinley administration demonstrated with ease; nor was it 
entitled to very much credit for its discernment, except as 
compared with its predecessor. 

" Our money is all good now, but its value must not be further 
threatened," said the President. These words are very sig- 
nificant, especially in their application to those w r ho have been 
proposing reforms since the inauguration which would strike at 
the very root of Mr. McKinley's wise recommendation. This 
"value" to which he refers would certainly be further " threat- 
ened" by retiring the greenbacks and the Treasury notes, and 
thus converting a non-interest-bearing debt of $500,000,000 
into an interest-bearing one. 



196 THE WALL STREET POINT OF VIEW. 

"It has been our practice/ ' said the President, "to retire, 
not to increase, outstanding obligations." This, certainly, though 
mild in form, was a very strong rebuke in its essence to those 
who were diametrically and avowedly opposed to these views. 
Of course it is all right for cabinet officers to cherish their own 
independent opinions, but if they try to enforce them when 
they are not in harmony with the views of the majority of the 
cabinet or of the President, I think it has a decided tendency 
to cause discord. 

The whole plan of providing a sufficient revenue, and at the 
same time laying the true foundation of national prosperity, is 
ably condensed in the following remarks of the President : — 

"The government should not be permitted to run behind or 
increase its debt in times like the present. 

" Suitably to provide against this is the mandate of duty, the 
certain and easy remedy for most of our financial difficulties. A 
deficiency is inevitable so long as the expenditures of the govern- 
ment exceed its receipts. It can be met only by loans or an 
increased revenue. 

" While a large annual surplus of revenue may invite waste and 
extravagance, inadequate revenue creates distrust and undermines 
public and private credit. 

" Neither should be encouraged. Between more loans and more 
revenue there ought to be but one opinion. We should have more 
revenue, and that without delay, hindrance, or postponement. 

" A surplus in the Treasury created by loans is not a permanent 
or safe reliance. It will suffice while it lasts, but it cannot last long 
while the outlays of the government are greater than its receipts, 
as has been the case during the past two years. Nor must it be 
forgotten that, however much such loans may temporarily relieve 
the situation, the government is still indebted for the amount of the 
surplus thus accrued, which it must ultimately pay, while its ability 
to pay is not strengthened but weakened by a continued deficit. 

" Loans are imperative in great emergencies to preserve the gov- 
ernment or its credit, but a failure to supply needed revenue in time 
of peace for the maintenance of either has no justification. 

" The best way for the government to maintain its credit is to pay 
as it goes (not by resorting to loans, but by keeping out of debt), 
through an adequate income secured by a system of taxation, external 
or internal, or both. 



MCKINLEY'S POLICY — THE NATION'S FUTURE. 197 

" It is the settled policy of the government, pursued from the 
beginning and practised by all parties and administrations, to raise 
the bulk of our revenue from taxes upon foreign productions enter- 
ing the United States for sale and consumption, and avoiding for 
the most part every form of direct taxation, except in time of war. 

" The country is clearly opposed to any needless additions to the 
subjects of internal taxation, and is committed by its latest popular 
utterance to the system of tariff taxation. There can be no mis- 
understanding, either, about the principle upon which this tariff 
taxation shall be levied. Nothing has ever been made plainer at 
a general election than that the controlling principle in the raising 
of revenue from duties on imports is zealous care for American 
interests and American labor. The people have declared that such 
legislation should be had as will give ample protection and encour- 
agement to the industries and the development of our country. 

"It is therefore earnestly hoped and expected that Congress 
will, at the earliest practicable moment, enact revenue legislation 
that shall be fair, reasonable, conservative, and just, and which, 
while supplying sufficient revenue for public purposes, will still be 
generally beneficial and helpful to every section and every enterprise 
of the people. To this policy we are all, of whatever party, firmly 
bound by the voice of the people, — a power vastly more potential 
than the expression of any political platform. 

" The paramount duty of Congress is to stop deficiencies by the 
restoration of that protective legislation which has always been the 
firmest prop of the Treasury. The passage of such a law or laws 
would strengthen the credit of the government, both at home and 
abroad, and go far toward stopping the drain upon the gold reserve 
held for the redemption of our currency, which has been heavy and 
well-nigh constant for several years. 1 ' 



The President was exceedingly circumspect in these recom- 
mendations. He very adroitly anticipated and forestalled the 
critics who were keeping ostentatious and pretentious watch 
over Uncle Sam's purse. 

In this instance he drew the line between these two extremes 
of a large surplus and a deficiency which have proved the Scylla 
and Charybdis of some other administrations. It has been a 
feast or a famine with some of them : either too much money, or 
else an embarrassment that menaced the country with a burden 



198 THE WALL STREET POINT OF VIEW. 

of debt and the payment of a big interest bill for many years to 
come. President McKinley can strike very hard without being 
offensive, and he has a peculiar knack of conveying a profound 
meaning in what seem to be the most unstudied expressions, 
as when he said, for instance, " A surplus created by loans is 
not a safe reliance." 

The last sentence of the above quotation from the inaugural 
address is unique in that it so combines the two indispensable 
points in legislation, " revenue " and the " tariff," as to show 
clearly without argument that they cannot be considered apart. 
It completely forestalls in a very simple style some of the favor- 
ite arguments of the free-traders, and shuts off by way of antici- 
pations a flood of opposition oratory long since prepared to 
burst forth on the first favorable occasion. 

Events since this very comprehensive inaugural address was 
delivered have fully justified the wisdom and foresight which 
are implied in its sage advice. While many financiers and pro- 
fessors of economics were working hard over currency schemes, 
the advice of the President to "go slow" was both timely and 
prudent, and the admonition is as good to-day as it was then. 
His counsel concerning the most judicious methods of going 
about the question of currency reform is worthy of the most 
profound consideration of all who are interested in this subject ; 
and it should be carefully studied by those who imagine that 
they have made the only true discovery in the department, 
before they rashly run into print with the publication of their 
views. He says : — 

" If, therefore, Congress in its wisdom shall deem it expedient to 
create a commission to take under early consideration the revision 
of our coinage, banking, and currency laws, and give them that 
exhaustive, careful, and dispassionate examination that their impor- 
tance demands, I shall cordially concur in such action. 

" If such power is vested in the President, it is my purpose to 
appoint a commission of prominent, well-informed citizens of differ- 
ent parties, who will command public confidence both on account of 
their ability and special fitness for the work. Business experience 
and public training may thus be combined, and the patriotic zeal of 



MCKINLEY'S POLICY — THE NATION'S FUTURE. 199 

the friends of the country be so directed that such a report will 
be made as to receive the support of all parties, and our finances 
cease to be the subject of mere partisan contention. The experi- 
ment is, at all events, worth a trial, and in my opinion it can but 
prove beneficial to the entire country. 

" The question of international bimetallism will have early and 
earnest attention. 

" It will be my constant endeavor to secure it by cooperation with 
the other great commercial powers of the world. Until that condi- 
tion is realized when the parity between our gold and silver money 
springs from, and is supported by, the relative value of the two metals, 
the value of the silver already coined, and of that which may here- 
after be coined, must be kept constantly at par with gold by every 
resource at our command. 

" The credit of the government, the integrity of its currency, and 
the inviolability of its obligations must be preserved. This was the 
commanding verdict of the people, and it will not be unheeded." 

The latter part of this advice about keeping the value of 
silver at par with gold until bimetallism on international prin- 
ciples shall be realized, fell foul of several well-matured schemes 
in both the Republican and Democratic ranks to get silver 
out of circulation as suddenly as possible, both sides failing 
to see that the success of such a policy would give the free 
silverites the greatest triumph they have yet had, and would 
be a bad blow at the gold standard. 

Such a serious and sudden contraction of the currency, 
without something no more expensive than silver to supply its 
place, might readily cause one of the greatest panics in history, 
and enable the free silverites to say that their theory of the 
expansion of the currency volume would have prevented all 
this ; the fact being, however, that free coinage of silver would 
probably have brought about an even worse calamity. The 
President's comments, therefore, on this phase of the subject, 
were not only timely but full of financial wisdom, and showed 
the extensive range of financial vision with which he is en- 
dowed. No doubt he had in his mind the ordeal of business 
embarrassment through which Germany passed during the few 
years succeeding her demonetization of silver, although she 



200 THE WALL STREET POINT OF VIEW. 

had the immense store of gold furnished by the French war 
indemnity to rely upon. 

The following points on reciprocity and the power of Con- 
gress in restoring prosperity show the Presidents keen appre- 
ciation of the then existing emergencies, as well as the means 
of relief : — 

" In revision of the tariff, special attention should be paid to the 
reenactment and extension of the reciprocity principle of the law of 
1890, under which so great a stimulus was given to foreign trade. 

" It will take some time to restore the prosperity of former years, 
but we can resolutely turn our faces in that direction, and aid its 
return by friendly legislation. The restoration of confidence and 
the revival of business depend more largely upon the prompt, ener- 
getic, and intelligent action of Congress than upon any other single 
agency affecting the situation." 

The " reciprocity principle " was suppressed by mere par- 
tisan feeling, but it is hoped that we shall yet benefit largely 
by its revival. 

At the conclusion of the inaugural address the President 
dilated further on the necessity of the special session, and cor- 
rected some popular errors concerning its purpose and influ- 
ence. He said : — 

" I do not sympathize with the sentiment that Congress in ses- 
sion is dangerous to our general business interests. Its members 
are the agents of the people, and their presence at the seat of gov- 
ernment in the execution of the sovereign will should not operate 
as an injury but a benefit. There could be no better time to put 
the government upon a sound financial and economic basis than 
now. 

" The people have only recently voted that this should be done, 
and nothing is more binding upon the agents of their will than the 
obligation of immediate action. It has always seemed to me that 
the postponement of the meeting of Congress until more than a 
year after it has been chosen, deprived Congress too often of the 
inspiration of the popular will, and the country of the corresponding 
benefits. 

" It is evident, therefore, that to postpone action in the presence 



MCKINLEY'S POLICY — THE NATION'S FUTURE. 201 

of so great a necessity would be unwise on the part of the Executive, 
because unjust to the interests of the people. Our actions now will 
be freer from mere partisan consideration than if the question of 
tariff revision was postponed until the regular session of Congress. 
"We are nearly two years from a congressional election, and 
politics cannot so greatly distract us as if such contest was im- 
mediately pending. We can approach the problem calmly and 
patriotically, without fearing its effect upon an early election. 1 ' 

The peroration of this address is so fine, patriotic, and con- 
ciliatory in tone and sentiment, that I consider it worthy of 
being given in full. 

"In conclusion, I congratulate the country upon the fraternal 
spirit of the people and the manifestations of good will everywhere 
so apparent. The recent election not only most fortunately demon- 
strated the obliteration of sectional or geographical lines, but to 
some extent also the prejudices which for years have distracted our 
councils and marred our true greatness as a nation. 

" The triumph of the people, whose verdict is carried into effect 
to-day, is not the triumph of one section, nor wholly of one party, 
but of all sections and all the people. The North and the South 
no longer divide on the old lines, but upon principles and politics ; 
and in this fact surely every lover of the country can find cause for 
true felicitation. 

" Let us rejoice in and cultivate this spirit ; it is ennobling, and 
will be both a gain and blessing to our beloved country. It will be 
my constant aim to do nothing, and permit nothing to be done, that 
will arrest or disturb this growing sentiment of unity and coopera- 
tion, this revival of esteem and affiliation which now animates so 
many thousands in both the old antagonistic sections ; but I shall 
cheerfully do everything possible to promote and increase it. 

" Let me again repeat the words of the oath administered by the 
Chief Justice, which, in their respective spheres, so far as applicable, 
I would have all my countrymen observe : i I will faithfully execute 
the office of President of the United States, and will, to the best of 
my ability, preserve, protect, and defend the Constitution of the 
United States.' 

" This is the obligation I have reverently taken before the Lord 
Most High. To keep it will be my single purpose, my constant 
prayer, and I shall confidently rely upon the forbearance and 



202 THE WALL STREET POINT OF VIEW. 

assistance of the people in the discharge of my solemn respon- 
sibilities.'" 

It is interesting to reflect how vividly these sentiments of the 
oneness of all sections were illustrated during the war with Spain. 

Apropos of Mr. McKinley's reference to reciprocity, it is 
presumed by the free-trade element in politics that if got down 
to a free-trade level it would greatly encourage and stimulate 
other nations to purchase our goods, produce, and manufac- 
tures ; or, in other words, that it would " extend our foreign 
markets," as the ordinary free-trade phraseology has it. There 
is no good reason, resting upon business principles, to expect any 
such result. Nations, like individuals, buy in the cheapest mar- 
ket and sell in the dearest, the latter being the chief reason why 
England is anxious to obtain control of our markets for her 
goods. The people of other nations will not buy anything for 
friendship's sake from us that they can get cheaper elsewhere ; 
and certainly we do not put any tariff on the goods that we 
send abroad, though free-traders talk as if we did. We sell at 
rates that will enable us to compete with foreign manufacturers, 
if we can produce the article cheap enough to come down to 
that scale. If we cannot, we have to do the best we can with 
our home market ; and if, as free-traders hold, our home mar- 
ket is already overcrowded, it will certainly not stop the native 
glut if we give away a large portion of what is too small for our- 
selves to British manufacturers and to investors, speculators, 
and adventurers in British and foreign goods. 

The people who talk free trade seem to forget, when they tell 
us about the money we save in buying foreign goods, that the 
home-made goods afford about one third or more of the work- 
ing population of this country the means of earning a living, 
through the prudent and skillful investment, by our own manu- 
facturers, of money which would on free- trade principles go 
abroad. It may be objected that the manufacturers on this 
side take the lion's share of the profits. We may grant that ; 
but do not the British manufacturers and manufacturers of other 
nations do the same ? They are certainly not philanthropists 
in business. Besides, they do not possess the merit of leaving 



MCKINLEY'S POLICY — THE NATION'S FUTURE. 203 

half as much residue for wages as the American manufacturers 
do. To put the case even as strongly as the most rabid social- 
ist would do, namely, that it is " robbery," then it is robbery 
on both sides of the Atlantic ; and, if we are forced to a choice 
between two robbers, is it not better to choose the one that 
will give us enough of the plunder to feed and clothe us de- 
cently, than to permit ourselves to be victimized by the other, 
who will reduce us to starvation and rob our own " robber" 
manufacturers besides? I, for one, should certainly prefer to 
be " robbed " by our native monopolists, who generally keep 
the money in the country where I have a chance of getting some 
of it, even though it be not a fair share, than to throw myself 
and the fruits of my labor recklessly into the hands of foreign 
pirates, who spend it in Europe where we never have a ghost 
of a chance of getting back a solitary cent. If this argument 
is not clear and conclusive, common sense must be a very 
scarce commodity, and therefore an article of great value, 
according to the political economists. 

One of the strong charges of the free-traders is that the 
former McKinley Lav/ prevented importation in order to give 
the American market to " trusts and combines." Suppose, it 
will be granted for the sake of argument, that they were Ameri- 
can trusts and combines, not British or foreign ? This is simply 
the same argument, and the same answer applies to it. The 
McKinley Law was " A bill to reduce taxation, and for other 
purposes." Paradoxical as it may seem, it was more of a free- 
trade bill in one sense of the term than was the Wilson 
measure as the latter finally passed, which put only 48 per 
cent, of all our importations of merchandise on the free list, 
while the McKinley Law let in 60 per cent, of the whole list 
free of duty. There was this important distinction, how- 
ever, with regard to the quality and class of the goods : The 
McKinley Law admitted as few articles as possible that came in 
competition with our manufacturers, artisans, farmers, mechan- 
ics, and laborers, while the goods which the Wilson measure 
admitted came largely in direct competition with all these. 
These five special classes of our industrial system have had the 



204 TH E WALL STREET POINT OF VIEW. 

object lesson which enables them to draw conclusions from 
their own respective standpoints ; and they expressed their 
views very forcibly, more in actions than words, by the election 
of President McKinley by an overwhelming majority, and by 
the return of positive working majorities in both houses of 
Congress, in which the majorities four years previously were so 
decidedly in favor of something akin to free trade that the 
Democrats were predicting the enjoyment of half a century of 
unassailable power in office. But the people again proved 
that they themselves are the disposing power. It required this 
object lesson to teach the would-be reformers the great object 
lesson that was to be the forerunner of national prosperity. 

And now what has become of all the free-traders, with their 
panaceas and specifics for all financial ills ? If they are dead, 
have they no successors among their many admirers of the 
past? Seldom has there been in politics such a large conver- 
sion of a big majority into a vanishing minority. 

It is important to note the fact that President McKinley 
favored revision, but not revolution of the tariff, and a remodel- 
ing of the currency without diminishing its volume. He did not 
propose " taking the government out of the banking business* ' 
either; but he did propose taking the currency revision out 
of politics by placing it in the hands of a commission composed 
of up-to-date business men, irrespective of party politics. 
"Taking the government out of the banking business," "The 
endless chain," "The greenbacks must go," and other phrases 
of that kind should now be considered as having gone down 
with the general wreck. One of the best and most reassuring 
utterances of President McKinley in his inaugural address is this 
sentence : "The value of silver already coined or to be coined 
must be kept at par with gold by every resource at our com- 
mand. The credit of the government and the integrity of its 
obligations must be preserved." If Mr. Cleveland had made a 
similar statement in his inaugural address four years before, 
this country might have been saved from the disastrous panics 
which took place during his term. 

I think, in conclusion, that a word of friendly counsel which 



MCKINLEY'S POLICY — THE NATION'S FUTURE. 205 

I have already suggested, might not be out of place, as far as 
the present Secretary of the Treasury is concerned. Mr. Gage 
favors taking up the greenbacks, thereby relieving the govern- 
ment from the responsibility of sustaining gold payments and 
putting that obligation upon the national banks. He admits 
that it would result in a contraction of the currency which would 
depress values generally, but he says the situation would adjust 
itself through that process, as values would go down sufficiently 
low to induce foreign buying, which would make gold flow this 
way, so supplementing the currency thus contracted. To bring 
about a condition of depression such as Mr. Gage suggests, for 
the purpose of making bargains in our securities and products 
for the benefit of foreigners, would be resented by the people 
injured thereby in every State. The very thing that reduced 
securities and commodities to panic prices would revive the 
silver mania, on the belief of the need of more money, and 
would justify foreign capitalists in believing that this country 
was surely going to drift to a silver basis. If once they believed 
that, they would not buy our securities, however low in price; 
but, on the contrary, the lower they sold, the more Europe would 
liquidate what they held. That was the experience during 
the last silver dementia. The taking up of greenbacks by the 
government would of course save the United States Treasury 
from being exposed to the suspension of gold payments ; but it 
would be at the expense of the national banks, as it would take 
from them the money which they now hold for their reserves 
and for the redemption of their notes. The banks in times of 
severe depression and distrust would then be almost sure to sus- 
pend gold payments ; besides, as soon as the government went 
out of the legal tender currency business, the national banks 
would immediately begin to contract their circulation rather 
than be exposed sooner or later to a default in payment when 
gold should be demanded for their notes. A severe depres- 
sion in business, such as Mr. Gage proposes, would surely 
elect some such man as William Jennings Bryan as President 
of the United States in 1900. We had better "bear the ills we 
have than fly to others that we know not of." 



Part III. 

WALL STREET AND SOCIAL PROBLEMS. 



CHAPTER XXVII. 

THE MASSES AND THE CLASSES. 

No room for jealousy where political equality, by virtue of the Declaration 
of Independence and of the Constitution, exists. — Sectional hostilities 
and class animosities should not be fostered, but suppressed. — Errone- 
ous logic of those who want to get rich quickly. — The evil influence of 
communism and socialism on the body politic. — Geographical discrimi- 
nations to be repudiated. — George Washington's opinion on the sub- 
ject. — The question of the distribution of wealth and its rapid progress 
in the division of large fortunes. — If monopolies rule, whose fault is 
it ? — Accumulation of capital in the hands of a few, and how the so- 
cialistic remedy would work. — Advice to those who want to get rich 
rapidly. — Victims of soaring ambition. — How the Gould and Vander- 
bilt estates are distributed effectually without the aid of the socialists. 

IT is peculiarly deplorable that class distinctions should 
exist in this country. The whole idea is semi-barbarous 
in its character and unworthy of a people professing advanced 
civilization. It is a feeling, moreover, that a man should be 
ashamed to acknowledge on cool reflection, for the reason that 
it detracts from his own dignity as an American citizen, and 
deprives him in part, especially in the eyes of foreigners, of 
that character which is one of his greatest marks of distinction 
wherever he may travel. 

Then, too, the spirit of jealousy displayed against the East 
in many of the new States in the far West, because of the dis- 
parity in wealth which exists, is simply absurd. The people 
who cherish that animosity forget the fact that the Eastern 
people have had over a hundred years' start in the accumula- 

206 



THE MASSES AND THE CLASSES. 207 

tion of wealth. The remoter new States occupy a position simi- 
lar to that which young men just commencing life hold toward 
old men who have made their fortunes. Such starters in life 
should not become dissatisfied because they have to cope with 
powerful competitors. In assuming this attitude, they do not 
take into account that the older men have given three score or 
more years of hard work to the accumulation of wealth, and 
that they have the same opportunities to accomplish all that 
the older ones have done, providing they apply themselves to 
the effort with equal diligence. With the equality of opportuni- 
ties in this country that most men possess, why should there 
be any feeling of envy simply because one part of the country 
has had a hundred or more years 5 start over others, and has 
become rich in comparison ? England was rich, through the 
accretions of many centuries, before the United States came 
into existence. Did the people of the United States feel ani- 
mosity toward the English people because they had the start 
of them in money-making by many generations ? Take all the 
great fortunes in this country at the present time, — they were 
founded by men on the common level of all the people and 
without any money backing. This applies to the Astors, the 
Vanderbilts, the Goelets, the Mills, the Huntingtons, the Pull- 
mans, the Rockefellers, the Carnegies, the Havemeyers, and 
nearly all our other very rich men. What has been accom- 
plished by them can be accomplished by others in the future, 
and there will be just as good opportunities to make money in 
the coming generation as there have been in the past. 

There is no law of primogeniture or entail in this country by 
which the eldest son is preferred and falls heir to the whole 
estate, as in England and some other countries. Here, when 
the head of the family dies without making a will, the property, 
after his debts are paid, is divided equally among his children, 
or among the next of kin, in the event of direct issue failing. 
If he makes a will, he cannot do exactly as he pleases. He 
cannot tie up his property longer than for the life of the sur- 
vivor of two lives in existence at the time of making his will. 

The necessity for this restriction in the law of wills arose out 



208 THE WALL STREET POINT OF VIEW. 

of the case of the will of Mr. Thellusson, a London merchant, 
who lived a hundred years ago, and was possessed of a morbidly 
vain desire to have some one of his name very wealthy in the dis- 
tant future. He died worth half a million sterling, leaving three 
sons and three daughters to whom he bequeathed nothing, and 
his property, according to the will, was to accumulate for a cen- 
tury. As he died in 1797, the Thellusson heir came recently 
into an estate which exceeds $500,000,000. 

Absurd as Mr. Thellusson's will was, the trusts which it cre- 
ated were held valid by the Court of Chancery, and the decree 
was affirmed in the House of Lords. 

Commenting on this case Chancellor Kent says, — 

"This is the most extraordinary instance on record of calculating 
and unfeeling pride and vanity in a testator, disregarding the ease 
and comfort of his immediate descendants for the miserable satis- 
faction of enjoying in anticipation the wealth and aggrandizement 
of a distant posterity." 

The case gave occasion to the Statute of 39 and 40, George 
III., Chap. 98, prohibiting thereafter any person, by deed or 
will, from settling or devising real or personal property for the 
purpose of accumulation beyond a limited period ; and it was 
upon this act that the New York Act, New York Revised Stat- 
utes I., Chap. 773, was founded, relating to the restriction by 
will of future accumulations, — a principle which holds good with 
slight modifications throughout the United States. It will thus 
be seen that real estate cannot be kept out of the channels of 
commerce longer than the ordinary existence of a generation, 
and it may be set free much sooner, as life is uncertain. 

Now, reflecting further on these malcontents who want to get 
wealthy by hops and bounds without going through the hard 
preliminary struggle in most cases absolutely necessary to attain 
the goal of this ambition, I should like to ask some young and 
avaricious upstarts, who are probably trying hard to make both 
ends meet on salaries ranging from ten to twenty-five dollars a 
week, if they would exchange places with some of those old and 
wealthy veterans who have borne the brunt of life's battle up to 



THE MASSES AND THE CLASSES. 209 

the present time. Would they resign their youth and the pros- 
pects of the enjoyment incident thereto, and assume the infirm- 
ities of old age and the decay that indicates proximity to the 
grave, for all the wealth the aged millionaires possess ? 

A common observation very often used thoughtlessly, when 
a rich man happens to be the subject of discussion, is, " I 
wish I had his money." It seldom strikes the person who 
utters the wish that there is any dishonesty implied in the 
expression of this desire, but there is, whether the person who 
utters it may think so or not. The idea of stealing may be 
very far from that person's mind, but the remark will often 
bear the interpretation that the " wish is father to the thought " 
of theft, provided security from punishment were guaranteed. 
This is all wrong in a well-regulated, highly civilized, and law- 
abiding community. 

Another loose observation of an analogous character is very 
common, especially among politicians. When people are dis- 
cussing the subject of suddenly acquired wealth by a certain 
individual who had been poor prior to his advent in politics as 
a leader, perhaps some one will inquire, " Where did he get 
it ? " This will draw out further remarks as to the only pos- 
sible way in which he could get it, and some one will indignantly 
denounce such a corrupt state of affairs ; but immediately 
another thoughtful individual will speak up boldly in behalf of 
the accused and say, " I don't blame him if he was clever 
enough to do it." A number of others will very likely chime in 
with the last speaker, and Tom, Dick, or Harry, or whoever the 
fortunate politician may be, is at length probably absolved by 
the majority of that coterie who candidly acknowledge that 
they would take the risks of going to state prison, if they only 
got the chance, for the sake of the " boodle " in question. 

People of this description must have formed the subject of 
the poetic thoughts of " rare Ben Jonson " when he wrote the 

following : — 

" He that for love of goodness hateth ill 
Is more crown-worthy still 
Than he who for sin's penalty forbears, — 
His heart sins, though he fears." 
P 



210 THE WALL STREET POINT OF VIEW. 

As this style of poetry is too lofty in tone to reach the recep- 
tive faculties of the class under consideration, I shall quote 
another couplet, not by Ben Jonson, however, but better suited 
to their capacity and more to the point as a solemn warning : — 

" He that takes what isn't his'n, 
When he's caught should go to prison." 

Regarding the evils of sectional jealousy and kindred feel- 
ings, Washington said : — 

"In contemplating the causes which may disturb our nation, it 
occurs as a matter of serious concern that any ground should have 
been furnished for characterizing parties by geographical discrimina- 
tions, — Northern and Southern, Atlantic and Western, — whence 
designing men may endeavor to excite a belief that there is a real 
difference of local interests and views. One of the expedients of 
party to acquire influence, within particular districts, is to misrepre- 
sent the opinions and aims of other districts. You cannot shield 
yourselves too much against the jealousies and heartburnings which 
spring from these misrepresentations. They tend to render alien 
to each other those who ought to be bound together by fraternal 
affection." 

Distinctions are frequently made between " the masses and 
the classes," — words which have a fine sound when placed in 
juxtaposition, and have an attractive look in headlines, but 
they do not exist as solid facts in the contrast intended. They 
do not in reality imply any definite meaning. There are no 
classes in this country as opposed to the masses, and we are all 
one mass, at least all citizens are, and that mass is composed 
of an aggregate of sovereign citizens of this great Republic. 
The name " sovereign " excludes the very idea of having any- 
thing above it. It occupies the highest possible place of politi- 
cal eminence. 

As regards distinctions, these may be acknowledged in men- 
tal, moral, and social qualifications, but not in the political status 
of the citizens of the United States. We are all equal before 
the law just in the same sense that we are "created equal," 
according to the language in the preamble of the Declaration 



THE MASSES AND THE CLASSES. 211 

of Independence. This idea alone should bury in unfathom- 
able oblivion every thought of class, as well as of money and 
geographical distinctions, and we should heartily adopt the 
motto " Each for all and all for each," and glory in the idea of 
one united people. Negligence of this advice was the chief 
cause of the Civil War. 

Now, I am strongly of opinion that the spirit of socialism and 
communism, twin relics of barbarism, have had a great deal to 
do in recent times with the feeling of jealousy, class distinction, 
and dread of the money power which we see so frequently ex- 
hibited, and which if not checked may prove deleterious to the 
industrial and social interests of this country. There is no true 
grievance for which the citizens have not ample redress through 
the ballot box ; and when they complain that they are trampled 
upon by monopolies, trusts, and political bosses, the answer is, 
It is your own fault. The people who have votes are a hun- 
dred times stronger than all these other forces banded together, 
with all the money that such a powerful aggregate could com- 
mand. They are competent and fully equipped to defeat the 
whole army of trusts, monopolies, and selfish millionaires, with 
the communists and anarchists at their back, if we could possi- 
bly imagine such a heterogeneous combination \ for the latter 
elements of this supposed confederacy have no votes, as a rule, 
and the wealthy members only occasionally make use of their 
privilege of voting. 

Surely, this accumulation of capital is not an unmixed evil. 
But for capital the respectable laboring men, and even those 
disorganized nondescripts without classification, would be far 
worse off than they are. Labor is impotent without capital, 
and it will never be able to acquire capital so long as it listens 
to the disorganizers and breeders of perpetual discord. 

I should like to say a few more words to our Western breth- 
ren, especially the young and aspiring ones, on the subject of 
trying to grasp wealth too rapidly. The attempt to do so, in 
ninety-nine cases out of a hundred, ends in signal failure. 
Durable wealth can be acquired, as a rule, only by the method 
of slow and steady accretions, after the manner of constructing 



212 THE WALL STREET POINT OF VIEW. 

a coral reef. Of course there are eminent exceptions, but these 
are either rare instances of genius, where all ordinary rules are 
largely dispensed with, or of what may be regarded, for want 
of a better explanation, as good luck. Those who leave the 
regular path with such hopes will be almost sure to be disap- 
pointed, for geniuses in finance are very uncommon, and a turn 
of good luck may not come except at very long intervals. 

But young men need not despair under the impression that 
the chances to become wealthy are all gone. They are as good 
as ever. Of course competition is sharper, but the facilities for 
meeting it are better, and those who keep pace with the times 
and improve their faculties, just as the old men had to do in 
their time, have brilliant prospects in store. If the end is 
harder to attain, the means are better suited to the end \ and 
we have the experience of all the ages to draw upon, either 
for the purpose of enabling us to improve on the past, or by 
weighing the mistakes of others to help us to avoid similar ones 
in the future, and to keep clear of the rocks and shoals upon 
which former victims of soaring ambition were wrecked. His- 
tory and biography are the great charts by which we must steer 
our course — the philosophy that teaches by example. The 
trouble in the use of these instruments is that we do not benefit 
as much as we might by the experience of others until we apply 
it to our own personal action, and then it may be too late. 
Each must work in his own way and according to the gifts 
with which he is endowed ; and he must proceed rationally, 
thoughtfully, and with premeditation. " Give thy thoughts no 
tongue, nor any unproportioned thought its act," says Polonius 
to his son in Hamlet. Commodore Vanderbilt clothed the 
same idea in language almost as terse, though less grammatical. 
" Never let nobody know what ye're goin' to do till ye do it," 
was one of the Commodore's pet maxims, and he often acted 
upon it, to the great discomfiture of his enemies and competitors, 
and to the building up of the Vanderbilt millions. 

The main objection of communists, and others of the same 
bent, to present conditions is on the score of the unequal dis- 
tribution of wealth. I think there could be no better object 



THE MASSES AND THE CLASSES. 213 

lesson on this subject than that which the Vanderbilt millions 
afford. They have within a generation been transferred from 
a single owner to probably nearly a hundred possessors, either 
actually or in immediate prospect. There has been no tying 
up there. So it was with Jay Gould's hoards. They are rapidly 
coming under the same law of distribution, and even Paris is enjoy- 
ing a part of his hard-earned gathering, when the accumulator 
of it all has been but a few years dead. Other parts are being 
divided up among workmen in various industries, while certain 
amounts are expended in the encouragement of art, music, and 
the drama. Within a few years those hundred odd millions 
have been wrested by the hand of death from the original 
owner, from the one monopolistic hand and put into the hands 
of dozens of liberal distributers, who are sowing them broad- 
cast. The communists themselves could hardly do the work 
faster. 

If Gould himself left nothing to charity, his elder daughter 
is making up for that omission by devoting a large portion of 
her life work and a liberal amount of her fortune to that pur- 
pose. So " there's a divinity that shapes our ends." Gould 
"builded better than he knew," — for the world and for the 
communists also. 

If Commodore Vanderbilt was not a patron of letters, having 
no taste therefor, it must not be forgotten that he did a great 
thing for the Southern University by his bequest to that institu- 
tion ; and other Vanderbilt charities, such as the Clinic, must 
be taken into account in this important question of distribution. 

This natural method of division of property, unhampered by 
primogeniture, is far ahead in principle and in equity of any- 
thing that the world has ever seen. Certain socialists eulogize 
the Mosaic law of distribution, but according to that code the 
division and reversion took place only every fifty years, in the 
year of jubilee. Under the existing methods, which are con- 
stantly in operation, half a dozen apportionments may take place 
in the half century, and the diffusion is much better and more 
equitable. Certain theorists have suggested that the division 
to fill the aching void should be made during the mortal exist- 



214 THE WALL STREET POINT OF VIEW. 

ence of the monopolists and bondholders; but the result of the 
experiment made in this direction by Mr. Andrew Carnegie 
would seem to have cast a damper on the benevolent senti- 
ments of such philanthropists. Mr. Carnegie has been one of 
the best abused men in the country since he made arrange- 
ments to spend millions for the mental and moral improvement 
of the people. Public ingratitude is a great enemy to benevo- 
lence, and frequently closes the door against it. 



CHAPTER XXVIII. 

A QUESTION OF GOOD CITIZENSHIP. 

How do wealthy men compare with others as good citizens ? — Conditions 
that antagonize good citizenship. — The character and influence of the 
money hoarder and the absentee analyzed. — Decline in the rate of 
interest and of faith in the security of property among the most important 
questions of the day. 

SOME time ago a discussion went the rounds of the press 
on the subject of "good citizenship." 

Special and pointed reference was made to the distinctly 
wealthy citizen, to the man who had become conspicuous in the 
eyes of the public as being classed among the millionaires ; and 
the opinion seemed to be held by not a few that wealth has a 
tendency to impair a man's usefulness as a citizen. In fact, 
some people are disposed to think that a rich man cannot be 
a good citizen, any more than he can enter the kingdom of 
Heaven. 

For the latter opinion we have the highest scriptural authority, 
but in neither case would it be justice to the opinion to inter- 
pret the language literally. The Nazarene simply meant that 
the man who made a god of his riches could not enter the king- 
dom of Heaven, for surely no one can imagine that Christ would 
have excluded from Heaven such men as we see in our times 
and in this nation spending millions in charity with their own 
hands, and make provision for having millions more spent in 
the same laudable cause after their death. 

I am now thinking of such men as John Rockefeller, who has 
already spent ten or twelve millions, and Andrew Carnegie, who 
has spent probably an equal amount ; both of whom propose 
to spend many more. In the same honorable catalogue I may 

215 



2l6 THE WALL STREET POINT OF VIEW. 

include the Vanderbilts and many others. If I should go into 
the list of the deceased, even of those who have died within 
my own recollection, their names and the amounts of their 
bequests alone would extend this chapter far beyond the 
limits allotted to it. The extent and number of the charities 
of the late Cornelius Vanderbilt will probably never be 
known. 

Surely, Jesus of Nazareth never meant that the souls of 
these benevolent individuals should wallow eternally in despair, 
because they had been the mere instruments of collecting large 
fortunes, the greater portion of these fortunes being distributed 
where they would relieve the sufferings of humanity, and assist 
a large number of the community to avail themselves of a higher 
state of mental development than they had been provided with 
means to reach, merely by the accident of birth. 

Peter Cooper's gifts and bequests afford vivid illustrations of 
this point. Who can imagine for a moment that Saint Peter 
would be commissioned by the Most High to send to perdition 
his philanthropic namesake because the modern Peter had the 
prudence, industry, and economy to gather the wealth that put 
the institute which goes by the grand old man's name on such 
a financial footing as to teach thousands to earn their living in 
intellectual pursuits who otherwise would never have enjoyed 
the means of raising themselves above the level of the ordinary 
unskilled day laborer? 

Whatever the meaning of the mysterious Man of Nazareth 
might have been, common sense rejects the brimstone theory 
in its application to such a man as Peter Cooper, for instance, 
though he was not what was regarded in his day as an orthodox 
Christian. But, like another eminent man in his school of faith, 
" to do good was his religion," though unlike the other he did 
not claim " the world as his country," although in every sense 
it was. Peter Cooper was peculiarly and characteristically an 
American of the old school, and the truest type of genuine 
American manhood. 

I think it requires, or, at least, should require no further 
argument to show that the strictly orthodox interpretation as 



A QUESTION OF GOOD CITIZENSHIP. 217 

applied to a man like Peter Cooper is unutterably absurd and 
can be entertained only by unreasoning fanatics. 

I regard the opinion of the reprobation of rich men, simply 
because they are rich, as the rankest heterodoxy against the 
science of common sense and the best interests of the social 
condition as at present constituted with the family as its unit, 
in contradistinction to socialism and a paternal government. 
The wealth accumulators, I contend, are, as a rule, the best 
citizens. In fact, they are the citizens, above all others, who 
make it possible under our present system to attain the highest 
enjoyment and development, physical, moral, and spiritual, of 
which mankind thus far is capable. 

How far these wealth accumulators are mere automatons, 
working through the media of apparent selfishness, is a question 
with which modern philosophers are just beginning to grapple ; 
but the point that I wish to make clear is that the wealth pro- 
ducers and accumulators, with but few exceptions, are the 
hardest worked slaves in existence and have on the whole the 
least enjoyment, as the world estimates enjoyment, out of 
the wealth which, in common parlance, they are said to 
create. 

Of all writers on political economy, John Ruskin puts this 
condition of the wealth-creator, so-called, in the truest and 
most vivid, though in somewhat a ludicrous, light. He takes 
the position that the error in the popular view is the confusion 
of guardianship with possession, the real state of men of prop- 
erty being, too commonly, that of curators or managers, not 
possessors, of wealth. 

Of the man of wealth viewed in this light, Ruskin says : — 

" He cannot live in two houses at once. A few bales of silk and 
wool will suffice for the fabric of all the clothes he can ever wear, 
and a few books will probably hold all the furniture good for his 
brain. Beyond these, in the best of our but narrow capacities, we 
have but the power of administering, or maladministering, wealth. 
And with multitudes of rich men, administration degenerates into 
curatorship. They merely hold their property in charge as trustees 
for the benefit of some person or persons to whom it is to be de- 



218 THE WALL STREET POINT OF VIEW. 

livered upon their death, and the position explained in clear terms 
would hardly seem a covetable one. 11 

And again : — 

" What would be the probable feelings of a youth, on his en- 
trance into life, to whom the career hoped for was proposed in such 
terms as these : ' You must work unremittingly and with your ut- 
most intelligence during all your available years. You will thus 
accumulate wealth to a large amount, but you must touch none of it, 
beyond what is needful for your support. W 7 hatever sums you gain 
beyond those required for your decent and moderate maintenance, 
and whatever beautiful things you may obtain possession of, shall be 
properly taken care of by servants, for whose maintenance you will 
be charged, and whom you will have the trouble of superintending, 
and on your deathbed you shall have the power of determining to 
whom the accumulated property shall belong, or to what purposes 
it shall be applied 7 ? " 

And yet again : — 

" The labor of life under such conditions would probably be 
neither zealous nor cheerful, yet the only difference between this 
position and that of the ordinary capitalist is the power which the 
latter supposes himself to possess, and which is attributed to him by 
others, of spending his money at any moment. This pleasure taken 
in the imagination of power to part with that with which we have no 
intention of parting, is one of the most curious though commonest 
forms of the eidolon or phantasm of wealth. 11 

Now, if Ruskin's picture is a true-to-life portrait, and I am 
inclined to think it is, in spite of what to some people might 
seem its humorous exaggeration, then there can be no true 
reason why the wealthiest man should excite envy. In fact, 
the more wealthy the less enviable is he, as the burden of his 
mere trusteeship is the heavier. 

As a general rule, and not forgetting the few conspicuous 
exceptions, the man who is wealthy is naturally led to be a 
good citizen, even if he is the most selfish of individuals. His 
desire to increase his wealth is a potent cause of its distribu- 
tion, in which operation it must assist those who assist in its 



A QUESTION OF GOOD CITIZENSHIP. 219 

circulation, and benefit every man and woman through whose 
hands it passes as the medium of exchange for the necessities 
and luxuries of life. 

There is a glaring and morbid exception to this rule. That 
is in the case of the man who hoards his money, thus keeping 
it out of circulation, and thereby depriving both himself and 
others of the profits and increase that it is capable of bestow- 
ing when prudently invested. Such men violate the law of 
their being as mediums of distribution. Happily they are rare, 
for the faculty of acquisitiveness is stronger, after all, than the 
mania for hoarding, and generally overcomes the morbid fear 
of losing what they have in the risk of augmenting it. This 
passion for hoarding strikes at the root of national prosperity 
by retarding the growth of wealth, which is usually the conse- 
quence of investment ; and it is the duty of every citizen, in 
fact, it is one of the tests of good citizenship, for the successful 
man to share his prosperity with the people among whom he 
has achieved it. 

It is undoubtedly true that wealth brings new temptations, 
but in making money most men so broaden and occupy their 
minds that they are better fitted for withstanding those temp- 
tations. 

As far as national wealth is concerned, and looking at the 
subject from a patriotic point of view, — which is absolutely 
necessary in discussing the question of citizenship, unless a man 
claims to be a citizen of the world, — the chronic absentee is a 
bad citizen. He is no better for the United States than the 
English landowners are for Ireland, and he stands in a similar 
relation to his fellow-citizens as those rack-rent landlords do to 
their tenantry. Each draws a portion of the life blood out of 
his respective country to spend it in luxuries abroad. 

The question arises then, Is a man justified in playing uni- 
versal philanthropist at the expense of his compatriots ? Should 
the latter be required to contribute to support the elegant leis- 
ure of a person who has ignored them as fellow-citizens ? I 
know there is no law at present against it, but it seems to me 
from a moral standpoint that there should be set limits to the 



220 THE WALL STREET POINT OF VIEW. 

extent to which it should be tolerated. If a man virtually 
de-citizenizes himself, should he be permitted to retain all the 
rights and property benefits of good citizens whose constant 
aim and efforts have been in the direction of the best interests 
of the country? 

It seems to me that equity, at least, should require an extra 
tax for this discriminating indulgence. We have passed laws 
against the immigration of people who come here simply with 
the intention of earning all the money they can in a certain 
time and of going home to spend it there, without any inten- 
tion of assimilating with our people, or assisting to build up 
the nation in return for benefits received. Are they any worse 
than these habitual absentees ? Hardly so bad, I should say, as 
they do not owe their origin and birth to this country. Their 
procedure, though selfish, is not unnatural. 

There is a third influence at work which is antagonistic to 
the increase of wealth in this country, and that is the constant 
tendency for some years past to lower the rate of interest for 
money. To discuss this subject in all its bearings and in the 
numerous variety of its causes would require an entire chapter ; 
but one thing is evident in our social and political conditions, 
and that is that " populism " is undermining the very sources 
from which higher rates of interest were formerly drawn by 
becoming a potent instrument in rendering the status of society 
less secure. It threatens the stability of property, on which all 
security is founded ; and if once a feeling of insecurity should 
begin to spread, it would give rise to a transfer of capital to 
other scenes, where social and political conditions were less 
liable to change, and where it would incur less risk from 
the fluctuations of property values and incomes. There is 
nothing regarding which people are so sensitive as variations 
in the income upon which they are obliged to rely for the pur- 
pose of supporting a certain prescribed social status. Anything 
calculated to disturb this equilibrium makes them nervous and 
exacting as to the nature of the security for their capital and 
its income. 

The growing populism of the Democratic party in this 



A QUESTION OF GOOD CITIZENSHIP. 221 

country calls, therefore, for the most profound thought of our 
wisest statesmen, and the adaptation of the best measures to 
avert its evil influences. To establish the unquestionable secur- 
ity of property and income is one of the most important ques- 
tions of the day for the statesman to solve. And the certain 
means of maintaining that security without liability to disturb- 
ance or loss of confidence therein, is a question which all good 
citizens are bound to consider with the deepest solemnity. It 
goes to the root of our very existence as the great Republic. 



CHAPTER XXIX. 

LABOR UNIONS AND ARBITRATION. 

Even if there should be nothing to arbitrate, the arbitration will satisfy pub- 
lic opinion. — Strikes should be a last resort only against unbearable 
grievances. — The public are victims of the quarrels which they are inno- 
cent of provoking. — How arbitration works in Stock Exchange affairs. 
— Cooperation the true method of escaping the despotism of " bosses " 
and improving the condition of labor. 

THE first part of the following paper on the subject of 
" Labor and Arbitration " was written at the request of the 
late Henry C. Bowen, editor of The Independent, several years 
ago ; and as similar conditions still exist in the field of labor, 
and similar troubles constantly arise between employer and 
employe, the observations and comments herein are as appli- 
cable to the present as they were to the past. 

" It seems to me that in all differences of opinion on the question 
of wages or remuneration for labor, between employer and employed, 
arbitration should be tried in the first instance for all it is worth. 
There may be nothing to arbitrate, but no matter for that ; it will 
satisfy public opinion, and, in my opinion, is the best medium for 
throwing oil on the troubled waters. 

" If it were a rule recognized by both employers and employed 
to exhaust all the possibilities of arbitration with becoming patience 
and mutual forbearance, before ordering a strike or lockout, I be- 
lieve there would not be half the number of either that have been 
experienced during the last few years. The United States Strike 
Commission, in its reports on the Chicago strikes, briefly pro- 
pounded two courses of action which it recommended to the Ameri- 
can Railway Union, and which if followed out to their ultimate 
consequences would, I believe, be instrumental in preventing more 
than half the ordinary troubles : — 

222 



LABOR UNIONS AND ARBITRATION. 223 

"< First : — To take a position against all strikes, except as a last 
resort for unbearable grievances, and to seek the more rational 
methods of concilation and arbitration. To this object the power 
of public opinion would lend aid to an extent not now appreciated. 

ut Second: — Conservative leadership, legal status, and the edu- 
cation of members (of trades, unions) in governmental matters, 
with the principle in view that in this country nothing can accom- 
plish permanent protection and final redress of wrongs for labor as 
an entirety except conservative progress, lawful conduct, and wise 
laws enacted and sustained by the public opinion of its rulers — the 
people.' 

"Prior to the accomplishment of all that these two comprehen- 
sive paragraphs embrace, more than one campaign of education 
will be necessary. In fact it will require years of steady and per- 
severing educational drill to arrive at the ideal of this commis- 
sion ; but it is the only sure road to success, and though it will 
involve much weary plodding, the goal once attained, the fatigue 
and hardship endured will be amply rewarded. 

" Wherever this method of arbitration has had a fair trial, it has 
worked like a charm. The Stock Exchange affords one of the 
best examples of its talismanic power. Misunderstandings are 
settled by this association without expense, sometimes in a few 
minutes or a few hours, that would drag their weary length along 
from one to two or three years, at great expense and incalculable 
vexation, if they were taken into a court of law. I am therefore in 
favor of arbitration, not only in labor disputes, but in others where 
criminal proceedings are not an absolute necessity. 

" If all labor unions were the same in practice as most of them 
are in theory, they would be among the most beneficent institutions 
of the country. In proof of this I will quote a sentence or two from 
the constitution of one of them : — 

" ' The order, while pledged to conservative methods, will protect 
the humblest of its members in every right he can justly claim, but 
no intemperate demand or unreasonable propositions will be enter- 
tained. Corporations w 7 ill not be permitted to treat the organiza- 
tion better than the organization will treat them. A high sense of 
honor must be the animating spirit, and even-handed justice the 
end sought to be obtained, that the service may be incalculably 
improved and that the necessity for strike and lockout, boycott and 
black list, alike disastrous to employer and employed, and a perpet- 
ual menace to the welfare of the public, will forever disappear.' 

" These are noble sentiments, clothed in appropriate words and 



224 THE WALL STREET POINT OF VIEW. 

earnestly meant ; but it is noteworthy that in the same constitution 
there is not a word to be found imposing punishment or any kind 
of discipline for infringement or violation of these sentiments by 
the members themselves. This the commission very properly 
designates i a grievous omission,' and unfortunately, such omissions 
are frequent, and will be so until a more thorough education in the 
science of economics shall correct them. 

" I am now called upon to answer the question, — Should associa- 
tions of employers organize to meet the demands made by the labor 
unions? It is difficult to answer this question in full without 
many qualifications, but it would seem, if any considerable number 
of labor associations are united, that, unless the employers are also 
similarly united, the principle of arbitration could not be placed on 
an equitable basis or have a fair trial. In the case of managers of 
railroads there is a special difficulty about this. They are not 
authorized, it seems, by their charters, to form corporations or asso- 
ciations to fix rates for services and wages. Such privileges, it 
appears, must emanate from the same power that granted the 
charters. 

" The most important question connected with unions and strikes, 
however, was developed in its most glaring monstrosity in the 
Brooklyn trolley strike. There the poor public were for weeks the 
innocent victims of the quarrel which they had no hand in pro- 
voking, and were exposed to exhausting fatigue and the inclemency 
of the weather, from which, no doubt, many died, while there were 
several outbreaks of riot and consequent bloodshed. Such distress, 
disgrace, and violence might have been averted by timely arbitration. 

" The term ' compulsory arbitration ' is frequently used, but that 
seems to be a misnomer, as compulsion and arbitration are contra- 
dictions in terms ; but the blame for refusal to arbitrate should be 
placed and punished in some manner. 

"In conclusion I would say, without partiality to either employer 
or employed, never say 'there is nothing to arbitrate,' until the 
committee appointed for that purpose shall render its decision." 

Since the events to which the foregoing observations refer, I 
think great progress has been made toward a mutual under- 
standing between employer and employed on the subjects of 
labor and wages, but much yet remains to be done. 

There is a manifest disposition on the part of wage earners 
to become more of an organized power in politics and to free 



LABOR UNIONS AND ARBITRATION. 225 

themselves from the thraldom of the political "bosses." The 
greater headway they make in this kind of reform, the nearer 
will they be to the goal of their main purpose, which is to 
settle the question of wages upon an equitable basis, by virtue 
of which the capitalist may not oppress the wage earner by push- 
ing him as near to the starvation point as possible ; nor, on the 
contrary, may the wage earner insist upon remuneration which 
would reduce the capital below the point of living profits with 
sufficient surplus to preserve intact the capital from which the 
wage fund emanates, and without which wages and employment 
would be impossible, and bankruptcy the eventual fate of the 
capitalist. 

I know this is a very difficult point to settle, as was amply 
demonstrated in the Carnegie strike and other troubles of a 
similar character, each side holding different opinions on a sub- 
ject that should be easily demonstrated by the simple rules of 
arithmetic. The great trouble is that the representatives of 
both labor and capital are prone to regard the matter too much 
from their own respective points of view. Neither party seems 
to have the capacity to imagine itself in the other's place, and 
when it does sometimes actually get there, it seldom, if ever, 
gives any better satisfaction than its predecessor. 

Workmen and artisans will, I believe, generally testify to the 
fact than the workman or the artisan who happens to become 
a capitalist and an employer is the hardest kind of man to 
get along with, the most exacting, the most tyrannical, the 
least lenient to the faults and shortcomings of his w r orkmen, 
and the man who is readiest to grind them down in wages just 
as close to the starvation point as they can possibly endure. 
He is a man, also, most ready to discharge them on the least 
symptom of dissatisfaction on their part, even if he has to 
supply their places with men less efficient, but more servile 
and subordinate. He conveniently forgets or ignores his record 
when he was a laborer himself, and was perhaps one of the 
loudest declaimers against the despotism of the capitalists and 
employers. The experience of the workman with trades-union 
"bosses " is similar. There are of course many employers and 
Q 



226 THE WALL STREET POINT OF VIEW. 

" bosses " who have risen from the ranks, far removed from 
any of these contemptible feelings and practices ; but the class 
above described abounds more largely than superficial observers 
imagine, and they have a wretched tendency to keep the work- 
man down, and to crush him every time he attempts to rise a 
little higher. Therefore, if the laboring men are to ameliorate 
their condition to any great extent, they must begin by reform- 
ing themselves. 

A partial cure for the evils, thus apparently now inherent in 
the position of employer and the office of " boss," would be 
found in a more extensive system of cooperation, under which 
the workmen would each be employer and employed, capitalist 
and wage earner in one. There would be no boss authority 
except that delegated by the workmen themselves, and nobody 
to blame but themselves either for low wages or bad treatment. 

If a whole nation can hold together and be prosperous, 
organized on the principle of cooperation, and if the compo- 
nent parts of a nation, such as the various states, counties, and 
municipalities, can successfully organize on similar principle and 
similar lines, it would seem to follow logically that any number 
of sovereign citizens of such a country should be competent to 
organize themselves in a similar fashion for an object even more 
closely connected with their welfare than citizenship ; namely, 
the means of making life comfortable, enjoyable, and worth 
living, rather than a disagreeable burden, and a perpetual strug- 
gle for a poor livelihood. 



CHAPTER XXX. 

THE PHYSICAL FORCE ANNIHILATORS. 

Several species of this genus, including socialists, nihilists, anarchists, and 
communists. — A retrospect of their plans and purposes for the regen- 
eration of mankind and the reconstruction of society, after going through 
a few preliminaries, such as the suppression of rulers, and the extinction 
of capitalists. — According to the programme, the scheme will imply 
wholesale assassinations and universal plunder to begin with. — After 
purposes indefinite. — A problem for the socialistic reformers as pre- 
liminary to success. 

THE men whose peculiar characteristics and purposes I 
mean to discuss in this chapter, are not such objects of 
dread as their name, " Annihilators," might seem to indicate. 
The safety of both themselves and their intended victims is se- 
cured by the magnitude of the task they have undertaken, com- 
pared with the paucity of the means proposed to accomplish it. 

Their proposed scheme is nothing less than the annihilation 
of society and its reconstruction. In the reconstructed state it 
is presumed that everybody will be able to enjoy leisure, after 
performing about an hour's easy work daily. 

" Annihilator " is a generic term comprising several species, 
the principal of which are communists, anarchists, and nihilists. 
There may be a few others, but they are of minor importance, 
and, at present, I shall confine my remarks to those named. 
They wish to destroy everything and to build up anew. This 
purpose may include themselves in the general annihilation, and 
they may think that, like the phoenix, they can again rise from 
their ashes, — a supposition not more preposterous than some 
of the feats in the way of transforming society which they pro- 
pose to achieve. 

The annihilators think that they are very much oppressed in 

227 



228 THE WALL STREET POINT OF VIEW. 

this country, but they are under a delusion. The large major- 
ity of them have come from countries where the people are 
oppressed by military rule, and where the one-man power is 
predominant ; and they think that the same condition of things 
exists everywhere. They do not pay any attention to the study 
of our constitution and the nature of our government. If they 
did, they would discover that there is no place in the world 
where the laws and institutions, regarding personal liberty and 
the right of free speech, approach those of this country ; and no 
place where the annihilators themselves would be afforded the 
opportunity of earning as good a living as here. The enjoy- 
ment of such privileges is fully demonstrated by the fact that 
but few of them are in our prisons, — probably not any greater 
proportion than there are of our other citizens. This exemp- 
tion in itself is a privilege they could not enjoy in other lands, 
as many of them know from hard experience. 

If they would only conduct themselves decently for five years 
after arriving, they might have the chance of rising to the high- 
est positions in the land, except that of president ; and their 
sons born here would be eligible even for that eminent office. 
There is no other place in the world where such aspirations 
find any such encouragement or possibility of realization. Yet 
this country is probably first in wealth, second in area, and 
third in population, being excelled in the last only by China 
and Russia. 

Just think of the son of a poor, miserable, starving creature 
who was born in slavery, under the heel of an effete despot of 
Europe, being able to become a greater executive in power 
and influence than the imperial tyrant whose serf his father 
was born ! A few centuries ago an historic possibility like 
this would have been read in Europe like a fairy tale, classed 
with such stories as Cinderella and the Glass Slipper, or some 
of the tales in the "Arabian Nights' Entertainment." 

Such, however, is the ingratitude of human nature, that the 
very people admitted to the full fruition of these inestimable 
benefits, purchased by terrible struggles, are ready to turn, 
serpent-like, and destroy the social and political fabric reared 



THE PHYSICAL FORCE ANNIHILATORS. 229 

at so much expense and suffering, and which munificently con- 
fers the great boons of protection and sustenance on the down- 
trodden portion of humanity from every clime, on the most 
agreeable and easy terms. 

They have only to fall in with our facile customs and benign 
laws and perform a sufficiency of manual labor, or brain work 
if they are capable of it, to keep their bodies and minds in a 
healthy condition. In return for this they are fed and clothed 
better than some of the nobility whose servants they were ; 
and yet they are not happy. Are such people fit for freedom? 
Not except on the principle laid down by Macaulay, who said 
that the best way to regulate discontent, arising from what may 
be considered too much liberty, is to grant more liberty. 
Macaulay may be right, but he never had European annihila- 
tors, transplanted to American soil, to deal with, or he might 
have thought differently. I do not think, however, that we 
have anything to fear from these destructive elements in 
human form. They do not thrive on this soil ; they are not 
indigenous to it. They are exotics, and poisonous ones, but 
the fact that the poison is labeled in sight of all men is the 
best protection against its fatal effects. The few native or 
naturalized converts that these pernicious missionaries may 
bring over to their way of thinking, or raving, have no influence 
on the body politic in general, and only show by the ease with 
which they have been captured that they are not qualified to 
enjoy and exercise the prerogative of the citizenship bestowed 
upon them. Such easy subjects to the hypnotic influence of 
the annihilators do not count for much as members of our 
political system. They are excrescences upon it, and have to 
be endured in accordance with our generous system of gov- 
ernment, by which drastic measures are seldom resorted to 
except in the last extremity. 

This mild treatment may work to the detriment of our sys- 
tem in some instances, on the principle that forgiveness some- 
times only encourages sin ; but the country is strong enough to 
afford a large measure of benevolence, even at the risk of hav- 
ing its benignant rule of action imposed upon. The rule has 



230 THE WALL STREET POINT OF VIEW. 

worked tolerably well in practice for over one hundred years, 
and it would hardly be prudent to change it except in the face 
of clearly demonstrated necessity. 

Germany seems to have been the birthplace of socialism, but 
the present German organizations, and especially the scattered 
portions that have been transplanted to our soil, have departed 
materially from the principles held by the older brood in the 
fatherland. The latter believe in prosecuting their ends by 
constitutional, semi-constitutional, and educational methods ; 
but the new brood proposes first to demolish the existing sys- 
tem, and that without anything to put in its place. These peo- 
ple seem to think that, when chaos has come through this act of 
demolition, reorganization on a basis of social equality will be 
effected in some mysterious way. When the question, How ? 
has been asked at any of their big conventions, the effort 
to formulate a plan has frequently ended in violence among 
the very people who propose to organize the world as one 
happy family and harmonious brotherhood. This was notably 
the case in the Congress at The Hague in 1872. 

Two divisions were formed out of that secession, one called 
the " Black" and the other the "Red." The Blacks were the 
most uncompromising annihilators, and proposed the destruc- 
tion of all existing governments by physical force. They were 
the full-fledged nihilists, and took their name from the Latin 
word "nihil" — nothing, or "having no foundation in truth." 
The latter meaning, given in the Latin dictionary, seems to be 
peculiarly significant, as the system itself has certainly no foun- 
dation in truth \ but the organization which had itself baptized by 
this name evidently meant that " nothing " should remain of any 
government when they got through with it. Their special field 
was Russia, where, it must be admitted, they have worked so 
as to make their influence felt. 

The " Reds " were inclined to work by constitutional and 
educational methods, and at that time devoted themselves 
chiefly to Germany ; but their idea also was to make the anni- 
hilating brotherhood universal. 

The nihilists have probably not been so powerful or compact 



THE PHYSICAL FORCE ANNIHILATORS. 23 1 

for the purpose of general mischief in Europe since that dis- 
sension. At that time the crowned heads were beginning to 
stand in awe of them, and the division in their ranks was re- 
garded as a good omen by the royal families and rulers of 
Europe. Bismarck is reported to have said : " Crowned 
heads, wealth, and privilege well may tremble should ever 
again the * Black ' and the ' Red ' unite." 

It was recently reported that there has been a secret reunion, 
and also that the more rational portion of the annihilators pro- 
pose to make the United States a camping-ground and prepara- 
tory field where the sinews of war can be collected for the 
purpose of overturning the thrones and decapitating the rulers 
of Europe. They may decide on using this country for that 
purpose until the European conquest is accomplished, before 
turning their dynamite on us. There are a few able heads 
among them who have seen military service on the other side 
in all three armies, Russian, French, and German. There are 
also some Italians of the Carbonari type, and a small sprinkling 
of Spaniards, but very few English or Irish. 

Some of the more enthusiastic ones imagine that the revolu- 
tion can be made general and simultaneous on both sides of 
the Atlantic with the same facility that the telegraphers' strike 
was inaugurated at the same moment all over the country a few 
years ago by a whistle in the Western Union Building. These 
sanguine annihilators think that they will communicate with all 
their centers of activity through land and cable telegraph at 
the same instant, thus giving the command for the universal 
holocaust, when the armies of Europe, America, and Oceanica 
will be pounced upon mercilessly and become the prey of 
dynamite, no quarter being allowed except to those who are 
quick to embrace the destructive tenets of the annihilators. 

This part of the contract, however, is considered too vast by 
the more rational leaders, and especially by the " Reds," who 
favor the tactics of dividing and then conquering. While the 
" Blacks " consider the old method too slow and antiquated, the 
" Reds " think it is better to make sure of the victory even at 
the expense of a little delay, than to take risks by precipita- 



232 THE WALL STREET POINT OF VIEW. 

tion. The anarchists, too, are rather inclined to be on the 
conservative side ; but the nihilists are uncompromising, and 
want to get into action with their dynamite bombs and the 
murderous machinery of nitro-glycerine on the very shortest 
notice. In fact, the anarchists seem to be coming back to the 
original idea of their organization indicated by their name, 
"without government," which was used then in the sense that 
every man shall be a law unto himself, as predicted by some of 
the old prophets. This prophecy has yet to be fulfilled, for 
there is no record of any experience of its realization. It is 
supposed that the anarchists might have tried it on these lines 
with the favorable opportunities offered in this country at the 
time of the Chicago strike ; but Governor Altgeld of Illinois, 
being stronger with the nihilists than with the anarchists, was 
opposed to the views of those who advocated this theory, and 
they had to succumb, as Altgeld and his adherents had the 
" pull " in politics, and were bent in the first instance on the 
crippling of the trunk line railroads. 

As to the communists, who are members of the same anni- 
hilating family under consideration, there has been little heard 
of them since the sacking of Paris after the German invasion. 
From this long quietude of the commune we learn a lesson of 
great interest and significance to our own republic. Annihi- 
lators cannot multiply on republican soil. It is too rich for 
them, and they become plethoric upon it ; so, in order to avoid 
death by apoplexy they are obliged to emigrate, if they can 
find any place on earth that will harbor them. If they cannot, 
they await their inevitable fate where they are. Sometimes 
they even see the error of their ways, reform, and become 
peaceable citizens. 

John Most is now as gentle as a cooing dove and seldom 
makes an inflammatory speech • the two terms in prison, 
one in London and the other in New York, cured him. And 
the name of Justus Schwab of this city, who was so promi- 
nent a few years ago as a red-hot socialist, is seldom men- 
tioned. Why? Simply because he has accumulated some 
money by selling beer, sauerkraut, and quick lunch, and now 



THE PHYSICAL FORCE ANNIHILATORS. 233 

owns some real estate, including the house in which he lives. 
Consequently he is unable to see why he should divide up the 
fruit of his hard earning and frugality with the fellows who 
spent all their money in his saloon, while he was collecting it 
carefully and putting it in property to be divided among his 
children when he goes to the happy hunting grounds of the 
social reformers. He encouraged the socialists and the news- 
papers to advertise him and his place until he became inde- 
pendent, and then he did not have much use for either. 
The socialistic slate has been broken years ago, and the man 
who used to proclaim in the language of Prudhomme that " all 
property is robbery," now adheres firmly to the plunder which 
he was then amassing. Justus Schwab is a whole object lesson in 
himself, when the fiery Justus of seven or ten years ago is con- 
trasted with the sedate and tenacious property owner of the 
present time. 

John Swinton is another of those who have been careful to 
adhere to a fair share of the good things of this life, and, though 
he has been fairly consistent and has contributed according to 
his means both materially and intellectually to the cause of 
socialism, yet he has never been known, I believe, to let his 
own supply of loaves and fishes run short. John Swinton has 
always been the first consideration with him. Even when he 
started a newspaper he called it John Swinton's paper, so much 
was he in favor of giving John the preference ; and probably 
the name helped to kill it, for socialists are very jealous about 
individual honors, though their theory is the reverse. 

These eminent failures, and many others similar in kind, go 
to show that the proposed revolutionary system of reform must 
be sadly lacking in the elements of cohesion, popularity, and 
permanency. The great problem which these reformers have 
yet to solve is the exclusion of the selfish principle in human 
nature. In that they have apparently made very little head- 
way in half a century, and without this solution their socialistic 
schemes are so many ropes of sand. 



CHAPTER XXXI. 

THE ANNIHILATORS' METHODS. 

For the regeneration of society. — A closer examination of the remedies 
which the various destructive fraternities entitled to this common ap- 
pellation propose for the inequality complained of, and how they would 
work in practice. — Where will they get the men to help them to de- 
molish thrones and break up present political organizations? — They 
could put down the present tyranny only by establishing a greater. — 
Failure of all previous attempts to establish communities. — Our ballot- 
box and existing law are ample to maintain the strictest equality, to 
remedy all wrongs and redress all grievances. 

IN another chapter I have sketched a general outline of 
those restless, reckless, and revolutionary spirits who may 
be classed under the general appellation of " annihilators." 
They propose to abolish private property and suppress the 
motives for its acquisition. Of the various types of these revo- 
lutionists the only kind that seem to have a clearly thought out 
and analyzed programme of reconstruction after the destruction, 
are the scientific socialists. The anarchists and nihilists, as a 
rule, have only vague ideas of the detailed course of action of 
humanity after the emperors and presidents and legislatures and 
police are abolished ; they have boundless faith in luck after 
the universal disintegration ; but they make no provision that 
the same things which they now hate shall not happen again. 
Therefore it seems to me that those two kinds, anarchists and 
nihilists, are to be regarded by sensible people only as pestilent 
disturbers, who deserve no respect because they have not even 
a plausible programme to offer. 

But socialists have a pretty well-arranged plan of recon- 
struction. The governmental socialist is an evolution from 
the early communist ; but in the spirit of enforced equality, — 

234 



THE ANNIHILATORS 1 METHODS. 235 

equal sharing of everything without regard to merit, — 
they are alike. Let us begin with the governmental socialist, 
and examine the programme he offers us. Those who hold 
his views, like the revolutionists, propose to abolish the heads 
of all governments, European kings, presidents, and governors 
of states, also the various houses of legislation. Then they 
propose to establish a system of compulsory equalization. In 
their own words they mean to have, " instead of the capitalistic 
and individualistic system of production and distribution, a 
system of governmental cooperation and governmental pro- 
duction and distribution. The whole people of a country in 
their collective capacity shall produce and distribute every- 
thing, like a great joint stock company, only more equitably." 
The new government is to control railroads, telegraph lines, 
and all kinds of industrial forces. In this scheme there will 
be no room for, or incentive to, individual enterprise. Every 
person is to work under no other stimulus than that the fruits 
of his labor are to be divided equally among the members of 
the community to which he may belong. 

These people, while making high-sounding statements regard- 
ing the happiness sure to result upon the adoption of their 
principles, are quite reticent as to the means for effecting the 
transformation, although it is to be the most radical change and 
on the largest scale that has ever been attempted. " Socialism,' ' 
they say, " would abolish poverty by preventing it, by removing 
its causes. As poverty is the cause directly or indirectly of 
nearly all crime, therefore, by the abolition of poverty, crime 
would become almost unknown, and with crime would disap- 
pear all the 6 leeches/ ' vampires,' and ' vermin' that fatten on 
its filth, — such as the entire legal fraternity, soldiers, police, 
judges, sheriffs, priests, preachers, and many others." 

Now, this is very well as a description of society in its meta- 
morphosed condition, but how we are to get there is another 
matter. The socialists point to a development through the 
trusts, forgetting that between the largest aggregation of com- 
mercial trusts and the smallest attempt to give to every mem- 
ber of the community an equal share in the general profits, 



236 THE WALL STREET POINT OF VIEW. 

there is a great gulf to be jumped. Not one of the four lead- 
ing species of annihilators gives any satisfactory explanation of 
this. They all seem to take it for granted that the only thing 
necessary will be to send around the cards of the new candi- 
dates for the committee on reorganization, and the latter will 
be elected unanimously. No allowance seems to be made for 
the possibility of any opposition to the new regime. It is 
thought to be so attractive in its nature that everybody must 
irresistibly embrace its doctrine the moment it is presented to 
them. 

Why the reformers, or rather the upsetters, have a right to 
expect this sudden change in human nature is not stated. It 
is not considered necessary to state it. It is one of those 
things that are supposed to be self-evident. Yet when one 
begins to canvass the opinions of the community anywhere, 
he finds that this change, or rather transformation of mind, 
and this desire for another condition of society, have very 
few adherents. There is not one person in twenty, or perhaps 
in a much greater number, who would not set the individual 
down for a crank or a crazy person who began to talk on the 
subject of the impending revolution and the new state of society 
and politics, where nobody would desire to get the money he 
earned, but would be willing to have it put into a general fund 
to be divided equally at the times set apart for such division. 
It is safe to say that not one out of a thousand would listen 
for a moment to any such extraordinary arrangement for the 
disposal of the fruits of his or her labor. 

Where, then, are the converts to the new regime to come 
from ? Can the annihilators manufacture them ? When Mar- 
shal Ney sent to Napoleon for more men at Waterloo, the 
answer of the chief was, " Does he expect me to make them ? " 
The annihilators seem to have some such expectation. They 
appear to think that some unseen power will make these men 
to order, fully imbued with the ideas of a new dispensation, 
and prepared to enforce it despotically upon society as it exists 
at present. 

That the change proposed is not adapted to the nature of 



THE ANNIHILATORS 1 METHODS. 237 

mankind, as the latter has existed from time immemorial, will 
be readily understood if we go back a few thousand years to 
the patriarchal age when people lived in tribes. This was 
communism on a small scale, and if it had been consonant with 
human nature to adapt that mode of existence to a larger scale, 
then was the most appropriate time to begin the operation. 
But instead of this being the social purpose at the period in 
question, the tendency was all the other way. This may have 
been owing to the perversity of human nature, its general in- 
ability to discern what is for its best interests, and its natural 
proneness to evil ; but it is a " condition, and not a theory, 
which confronts us," and in considering this question in all 
its bearings, we are obliged to take both human nature and 
society, as at present constituted and as it formerly existed, in 
the concrete, not the abstract. In other words, we are obliged 
to take it in the most practical sense in which any scheme of 
organization or reorganization must deal with it. We may 
people the world with imaginary beings, and work out Utopian 
theories for our own amusement and the entertainment of 
others who delight in that kind of theorizing ; but in practical 
life such theories will prove of the most delusive character, and 
leave us eventually the sorry victims of our own folly and over- 
heated imaginations. 

One of the most interesting features of the proposed new social 
state, in which everybody is to be supremely happy in the thought 
that he is working for the benefit and maintenance of everybody 
else, is the currency idea. This part of the programme out- 
shines anything that has been suggested by either silverites or 
Populists. It is to be a new currency, of course, based upon 
the credit of the new state. The material has not yet been 
agreed upon, but it will be neither of the precious metals, 
These are tabooed, and the unit of value to start with will be 
a hundred minutes of labor for one dollar, or a cent a minute 
when the minutes are fewer than a dollar's worth, and there will 
be no means of measuring the quality or quantity of labor per- 
formed except by the conscience of the laborer. 

Nothing is to be taken note of except the time, and it is 



238 THE WALL STREET POINT OF VIEW. 

to be left to the good will and option of the individual him- 
self whether he works or "loafs." As he will get as much 
for one as for the other, there can hardly be two opinions 
as to which any but a very few conscientious ones will choose. 

Here again the presumption is that all people will be con- 
scientious philanthropists. 

This is presuming an entire change in the feelings and 
desires of the beings who are to be citizens of the New Utopia, 
and an utter absence of every incentive and motive which now 
prompts the individual to labor and lay up for the future. It 
is easy to see that such a condition of things, if possible, would 
stop all development, and a state of stagnation would be the 
inevitable result. Then for generations there would be per- 
petual war between the rising generation and that which would 
then be passing away after having introduced these felicitous 
changes in human economy. The transmission of the selfish 
ideas of the old Adam would be certain to come up from time 
to time in the younger offspring, thus perpetually disturbing 
the harmony of society. No power could suppress this evil 
tendency for many generations, as it is inherent in human 
nature itself and one of the mysteries hitherto beyond the reach 
of solution. With a finer development and the entire suppres- 
sion of selfishness, the secret may be discovered and the prob- 
lem solved by some philosopher of the future school of thought. 

But here again we are met with another difficulty, when we 
speak or think of development of thought. How can such 
a thing exist in the sphere of the annihilators' future ? It would 
be entirely superfluous. " Eat, drink, and be merry, for to- 
morrow we die," would be the motto of that social state. The 
only serious consideration would be to get sufficient work out of 
the members of the community to maintain the eating and drink- 
ing. The chief incentive to work, namely, profit, having been 
taken away, what kind of pressure would supply its place so as 
to keep the various communities up to the point of sustenance? 
It must be remembered that the " robber class" who, frorn the 
most selfish purposes, now deal in futures and thereby lay up 
Stores against famine, would all be extinct. Thus far there has 



THE ANNIHILATORS' METHODS. 239 

been no provision made to supply their place in the provisional 
work which they now perform by the law of natural selection. 

Suppose that on the brink of a crisis of this kind the com- 
munities should take a notion to go on a strike, being prompted 
by a spirit similar to that which of old seized the Israelites 
when Moses restricted them to a manna diet and they longed 
for the " fleshpots of Egypt," — what method of discipline 
would be resorted to in such an emergency ? It seems to me 
that people would be placed in such a quandary that they 
might be obliged to cast lots and resort to a tiding-over experi- 
ment in the way of cannibalism until the clouds of famine should 
roll by and the demoralizing influences of the food panic pass 
over. 

Then the selfish spirit of the forefathers would begin to rebel, 
and by and by get uppermost, involving the biggest insurrection 
that the world has ever seen. 

Now, I have taken one illustration from ancient history, that 
of the tribal organization, to show that the communistic idea 
was wanting in the seeds and attributes of permanency. The 
system evidently had not come to stay with those good people, 
and they did not transmit it to their modern posterity, who have 
embraced the selfish marriage of man and wife, together with 
their other backslidings. The family, as understood by the 
ancients, being simply a modification of the tribe, no longer 
exists in the civilized portions of the globe. It is still extant 
in China, and also, with various modifications, in other East- 
ern nations and among certain tribes of Africa ; but wherever 
its existence lingers, one of its characteristics is that the people 
are poor and ignorant. It was tried, and in course of time 
rejected, by a few of the ancient nations who stood highest in 
the scale of what we understand by civilization ; but it is signif- 
icant that, as the idea died out after various experiments, people 
began to grow more humane, and what is designated " civiliza- 
tion," for want of a better term, developed among them. They 
began to improve in their habits, a higher standard of morality 
began to prevail, domestic comforts were improved, more even- 
handed justice was dispensed, and provision against the emer- 



240 THE WALL STREET POINT OF VIEW. 

gencies of life became a subject of personal and individual 
concern, and conduced largely to a higher dispensation of 
happiness in the " selfish " family circle. Under this progres- 
sive state of evolution great discoveries have been made, for 
which there could be no inducement in a socialistic system. 
And the world, especially the republican portion of it, is making 
considerable progress toward the highest plane of happiness 
and prosperity ever dreamed of, except by annihilators. 

In quoting instances and illustrations of historical experi- 
ments in communism and socialism, there is one that should 
not be passed over in silence, as it is probably one of the 
most prominent of examples, and the only successful one. 
The community to whigh I refer was that formed on the 
day of Pentecost, of which the record is found in the New 
Testament, in the second chapter of the Acts of the Apostles. 
It seems to have been organized by the twelve apostles, on the 
occasion of a meeting in Jerusalem to promote the spread of the 
gospel. There was a large assemblage, composed of the repre- 
sentatives of various nations, many of them Jews, mostly dwellers 
in Jerusalem, then the metropolis of Palestine. According to 
the narrative written by St. Luke, the assemblage was touched 
by a miracle which caused the disciples to speak in the tongues 
of the foreigners. Some of the audience were astonished, and 
were curious to know the meaning of it, while others mocked 
and said, " These men are full of new wine." The Apostle 
Peter, however, sustained the theory of the miracle in a power- 
ful sermon, and a large number of the people must have agreed 
with him, for he succeeded in organizing an association or 
church of three thousand members, the result of the initiation 
being the sale of everything that the person possessed, the 
proceeds to be put in a common fund, and the members of the 
community — " all who believed" — to have "all things in 
common." The narrative goes on to say that these people 
" sold their possessions and goods and parted them to all men 
as every man had need," and furthermore, that "the Lord 
added to the church daily such as should be saved." 

Now, this community was established under what must be 



THE ANNIHILATORS 1 METHODS. 241 

considered the most favorable auspices, and under divine pro- 
tection and guidance ; yet there is no account that I have seen 
or heard of concerning the prolongation of its existence beyond 
a short period. 

Where the church or community organized by the Apostle 
Peter and his eleven holy brethren of the same community 
did not succeed in transmitting that system to posterity, what 
chance is there for miserable, wicked creatures, who are con- 
stantly breathing fire and slaughter against capitalists, to estab- 
lish a permanent organization of a communistic character that 
has any guaranty of becoming a popular success ? 

To put the question thus clearly and plainly, is, I think, to 
answer it. There cannot possibly be any hope of such an ex- 
periment succeeding in a civilized community, and its success, 
if possible, would institute the worst system of slavery with 
which the world has ever been cursed. It could not be organ- 
ized in the first instance, except by the strongest and most cruel 
kind of tyranny. It would relegate humanity to a state of the 
most selfish savagery. 

All the modern experiments, likewise, have failed, and most 
of them were of a mild and civilized character. Robert Owen, 
a Welshman who made a fortune in the cotton trade, spent 
about a quarter of a million dollars in eleven experiments in 
attempting to establish communism by rational methods, and 
through reason and education. One of these was New Har- 
mony in Indiana. His son, Robert Dale Owen, who had been 
induced for a time to assist his father in these abortive attempts 
to transform human beings into the similitude of angels, gave 
up the business, became an ordinary member of civilized society, 
and put his very liberal education and bright intellect to use- 
ful purposes as an author and a magazine writer. He also had 
a short but honorable career in Congress, and died in 1877, 
deeply lamented by a large circle of friends and admirers. 
His father died in 1858, at the age of eighty-seven, after hav- 
ing spent fifty years and $300,000 in the unsuccessful effort to 
establish communism on a healthy and permanent basis. 

Robert Owen was a great philanthropist, highly respected in 



242 THE WALL STREET POINT OF VIEW. 

the highest circles in England, and a special favorite with the 
royal family there, despite his radicalism. He once lent Wil- 
liam IV., Victoria's uncle and predecessor, ^10,000, and when 
the king handed him a promissory note for the amount, he 
threw it in the fire. When men of such high purposes and 
plenty of money to back them up fail to succeed in the experi- 
ments under consideration, what must be the fate of men whose 
theoretical morals, at least, are of the lowest type, and who have 
no money to put any enterprise under way — hardly enough 
even to print their inflammatory and traitorous platforms? 

These people talk about defending the laborer while they 
propose to rob the capitalist, apparently forgetting that capital is 
the fruit of labor, and is quite as necessary as labor in any plan 
of cooperation, large or small. Man in his present state of civil- 
ization is more helpless without capital than a wild monkey of 
the forest ; and capital cannot be preserved and increased to 
the point of doing its greatest possible good and reaching its 
highest aims and purposes without the cooperation of its natu- 
ral ally, labor. There should be no disruption or discord, there- 
fore, where such vital interests are mutually indispensable to 
the health, happiness, and prosperity of the whole people. 

Neither the system of Owen, nor that of Fourier the French- 
man, seeks the destruction of any property, but rather the build- 
ing up of it. The destructive idea is quite modern. The 
Fourier system was tried in this country on Brook Farm, at 
Roxbury near Boston, Massachusetts, from 1841 to 1846, and 
several of the most prominent literary personages of a little 
over half a century ago went through the mill of experience 
on this famous farm. Among them were Horace Greeley, 
George William Curtis, William Ellery Channing, George Rip- 
ley, Albert Brisbane, and Charles A. Dana. These men, with 
a few clever women (of whom Margaret Fuller was one), as 
might be expected from their high intelligence and honesty of 
purpose, soon demonstrated the futility of the experiment and 
gave it up. Brisbane was probably the only one who adhered 
tenaciously and publicly to the opinions and platform of Fourier 
after the farming experiment failed. He translated Fourier's 



THE ANNIHILATORS* .METHODS. 243 

works and wrote books and comments upon them until near 
the time of his death a few years ago. Fourier died in 1837, 
leaving a host of disciples on both sides of the Atlantic, who 
are now nearly all dead. Brisbane was probably the last of 
the enthusiastic ones on this side. 

Those communities that have been organized on the osten- 
sible foundation of religion have had fair material success dur- 
ing the lives of their leaders and organizers, but the gross 
immorality which has characterized most of them soon planted 
the seeds of their decay, and the successors of the original 
leaders were seldom able to continue the full authority be- 
queathed to them. This has been the result with the Oneida 
Community experiment at Oneida, New York, over which a 
man named John Noyes ruled with a rod of iron for many 
years. After his death the community collapsed. The Salt 
Lake experiment in Utah, organized by Joseph Smith and 
Brigham Young, has been handicapped by the strict execution 
of the laws passed by Congress against polygamy. Young was a 
man of extraordinary personal power, with great individuality and 
marvelous magnetic influence over his deluded followers. He 
found Utah a barren wilderness and left it a fertile garden. 
He built a temple larger than that of his polygamous proto- 
type, Solomon, although the gold was hardly so abundant 
in the Utah structure as in the sacred edifice of Lebanon 
built by the wise king of Israel. At last the nation became 
disgusted with the whole system, and suppressive enactments 
were passed by Congress designating polygamy a crime. 

My strictures as to immorality do not apply to the Shakers, 
who have, perhaps, come nearer to success than any modern 
movement. Even they, however, lack vitality and are rapidly 
dying out. 

One of the great elements of disintegration in all of these 
efforts to organize a community on a permanent basis arises 
from the dissatisfaction inseparable from the idea of the fruits 
of one's labor being devoted to persons who put forth no effort 
to assist the community. This and the strong desire im- 
planted in the human mind for hire and profit as the reward 



244 THE WALL STREET POINT OF VIEW. 

of labor appear to overcome all the broader intentions of ele- 
vating the standard of the whole community and of making the 
individual sacrifices necessary to accomplish the end. That 
self-preservation which is the first law of nature would thus 
seem of itself capable of frustrating every effort to establish a 
community where the earnings are to go into a common fund, 
and where the most industrious and frugal individual, as well as 
the genius, is to be depressed to the working level of the lowest 
human animal. 

The drones are the chief disintegrators of all these social 
schemes, but the tyranny of the " bosses," which always 
develops with the possession of power, is a potent factor of 
destruction by inciting rebellion. The worm will turn when 
trampled on. 

In conclusion, I would say that the privileges connected with 
the ballot-box make provision for equality and equity as near 
perfection as any theory that the annihilators can prescribe. 
With regard to the abuses of trusts and other corporations, the 
legislation already on the statute books, both national and in 
most of the different States, together with the provisions of the 
common law, are pretty nearly sufficient to deal with these 
matters so as to remedy and correct all abuses. 



Part IV 



WALL STREET AND INTERNATIONAL 

AFFAIRS. 



CHAPTER XXXII. 

PEACE AND PROSPERITY. 

Some reflections on the horrors of war. — How it ruins material prosperity 
and degrades humanity. — Remarks on the efforts of the six European 
powers to put Europe on a peace footing. — The favorable influence 
which the success of the movement would exercise on trade and com- 
merce. — Plans for an Anglo-American reunion discussed. — Captain 
Mahan's views. — A defensive alliance of all civilized nations against a 
possible invasion of barbarians. 

I TAKE the title of this chapter, "Peace and Prosperity/' 
to be the union of two words that in their meaning can 
scarcely be disunited. The apparent prosperity that war 
sometimes brings must be dearly paid for, either by the parties 
themselves or their descendants, as in the case of our own 
Civil War, the debt of which is not yet paid. 

Napoleon I. brought the continent at large to a condition of 
bankruptcy in which France herself was overwhelmed, despite 
the immense plunder secured by the unexampled avarice of the 
conqueror; and England, though she emerged victorious out 
of that terrible struggle, did so only at the expense of a per- 
manent debt, which by certain statesmen has been considered 
a national blessing, as a means of investment. To me it seems 
rather that a national debt, instead of being a national blessing, 
is a national curse of inherited taxation incurred to gratify the 
ambition of a few individuals, — who probably never have to 

245 



246 THE WALL STREET POINT OF VIEW* 

abate one of their luxuries in consequence of their errors, — 
or of being the instruments of so much entailed misery to 
millions. 

Yet we hear people constantly talking about the glorious 
achievements of war and the prosperity which attends it. War, 
in the nature of things, can never bring prosperity except to a 
comparatively small number of individuals at the expense of 
taxing an exceedingly large number, together with their off- 
spring for generations. These remarks apply more especially 
to wars of conquest, wars for sustaining imaginary dignity and 
wars for prolonging the power and prestige of the reigning 
monarch or executive when the people are tired of him and 
he wants some excuse or plausible plea to revive his popularity. 
Such to a large extent was the Franco-Prussian War provoked 
by the necessity and ambition of Napoleon III. and the Em- 
press Eugenie, and such would have been the war which might 
have been fomented with Great Britain by President Cleveland, 
when with overweening zeal he espoused the cause of Vene- 
zuela under the questionable plea that the Monroe Doctrine 
was dangerously menaced. 

It has now been amply demonstrated how easily that Anglo- 
Venezuela misunderstanding could have been settled by arbi- 
tration, without causing the least disturbance to the business 
interests of either of the nations concerned ; yet before this 
was made manifest our country had to pass through an expen- 
sive panic, which also reflected a very unfavorable influence for 
a time on the business interests of Great Britain. 

Looking at the subjects of peace and war through the me- 
dium of business experience, to say nothing of the far greater 
questions of human happiness and misery involved in their 
consideration, it is a healthy sign of the times and a forecast of 
a higher development in civilization to witness the action in 
the interests of peace and prosperity taken by the six great 
powers of Europe in the Turko-Grecian affair. Its success 
proves the possibility of what has been regarded as an impossi- 
bility, — the harmonious cooperation of the leading powers for 
the settlement of critical international disputes, even concern- 



PEACE AND PROSPERITY. 247 

ing matters in which their interests conflict. This is largely 
a new function in diplomacy, and what w r as accomplished 
in the case of this war shows how valuable a concert of this 
nature may become for the future maintenance of amicable 
international relations. The concert of the powers has intro- 
duced an important element favorable to the creation of per- 
manent political confidence. More than this, it is a great 
gain for quieting the disturbed state of European politics that 
the six states directly interested in the long dreaded Eastern 
question thus were able to discuss freely its involvements and 
agree upon a common policy to prevent its being made an 
occasion of common quarrel. 

The business interests of every civilized country, and of some 
that are not civilized in our sense of the term, are so related to 
one another through the expansion and development of trade 
and commerce that war has become a far more extensively dis- 
turbing element than ever before, and every year of progress 
renders it more and more so. We have thus arrived at an era 
in the advance of trade when an outbreak in even the smallest 
of the nations or a hostile collision with its neighbor is felt as 
a shock charged with forebodings of evil throughout the civil- 
ized world. No matter how free we ourselves may be from the 
immediate interests and bearings of the quarrel, and no matter 
how we may be able to profit by it temporarily, owing to its 
stimulating influence in certain departments of our exports, we 
nevertheless feel it as a premonitory symptom antagonistic to 
the interests of business in the long run. 

It is to be regretted that the United States Senate did not 
entertain a more cosmopolitan opinion of the great question of 
arbitration between this country and Great Britain. In view of 
the efforts which have recently been exerted to put the nations 
on a peace footing, it would have been a great honor to this 
country to have taken the initiative in such a grand interna- 
tional enterprise. The very effort to promote such a laudable 
design is a record to which future generations will point with 
pride, and which will illumine the history of that great nation 
which has so distinguished itself when most of the passing 



248 THE WALL STREET POINT OF VIEW. 

events, now regarded as of the highest importance, shall have 
been quite forgotten. 

The idea of a great union of civilized nations for mutual 
defense is rapidly developing in the minds of thoughtful people. 
We may perhaps say that its first impetus was given at the 
international conference at The Hague, but more recent events 
have tended to the crystallization of public opinion upon this 
subject, in unmistakable shape. 

China's reactionary defiance of the civilized world has set the 
people to thinking, and as a result we are about to witness the 
subjugation of barbarianism by the combined forces of civiliza- 
tion. It is of course earnestly to be hoped that this may be 
accomplished with little bloodshed, but that it must be accom- 
plished, even at high cost of life and treasure, is apparent from 
a glance at the following summary of the population of the 
countries now interested in common cause : — 

United States 75,000,000 

Germany . . 55,000,000 

France 40,000,000 

England 40,000,000 

Japan 40,000,000 

Russia . 80,000,000 

Total 330,000,000 

as against, say, 400,000,000 Chinese. The time has evidently 
come for the step to be taken. The Yellow Peril is a very 
real one, when we reflect that year after year since the Chino- 
Japanese War the armies of China have undergone thorough 
regulation and drill in the use of the most modern arms and 
appliances of warfare. 

Although an invasion by these Mongolian hordes, similar to 
the descent of the Goths and Vandals upon the Roman Empire, 
is not to be considered probable, still it must be granted that 
such a vast nation under one strong central government is a 
menace to the peace and prosperity of the rest of the world. 

To my mind, the best solution seems to lie in the decentral- 
ization of the Chinese government, — the division into princi- 



PEACE AND PROSPERITY. 249 

palities, autonomous in the government of internal affairs, but 
under the tutelage of the great powers now having territorial 
interests there. But the United States should insist that perfect 
good faith be kept in the pledges of an " open door" policy 
agreed upon by all the interested nations. A successful termi- 
nation of this present serious trouble will, it is to be hoped, 
form a lasting bond of friendship between all the great powers, 
and bring appreciably nearer the fruition of the Czar's great 
humanitarian proposals. 

The subject of an alliance of the English-speaking people 
has been very extensively discussed during the past few years 
by some of the ablest writers and thinkers of the day, and some 
have gone so far in accordance with the foregoing suggestions as 
to advocate an alliance of all civilized nations. Among these 
may be mentioned Captain Alfred T. Mahan, formerly of the 
United States Navy, who is, perhaps, one of the greatest marine 
tacticians in the world, and a man capable of taking the widest 
range of vision of all that relates to the sea, both from a mili- 
tary and a commercial point of view. His ideas, therefore, on 
the possibilities of an Anglo-American reunion are worthy of 
the most careful consideration, and will furnish an excellent 
guide to any one pursuing the study of the influence of that 
reunion on the financial affairs and prosperity of the proposed 
reunionists, and especially on those of the United States. 

Among others who have recently made most valuable con- 
tributions to this department of literature may be mentioned 
Captain Lord Charles Beresford, of the Royal Navy of Great 
Britain ; also Sir George Clarke, Mr. Arthur Silva White, and 
Mr. Andrew Carnegie. 

Captain Mahan dwells at length on the necessity of America 
taking a deeper interest in the sea, which he regards of far 
greater importance than the land. He thinks that the time is 
past forever when any single nation can control the domain of 
the boundless deep, but suggests that an Anglo-American alli- 
ance could do so to the great interest of both parties, and to 
the union and the benefit of humanity at large. His great 
apprehension of the future seems to be a possible inundation 



250 THE WALL STREET POINT OF VIEW. 

by countless hosts of outside barbarians, while he does not 
forget the inside ones in the shape of anarchists and socialists. 
He believes in the firm maintenance of the military system for 
accomplishing the highest objects of civilization. In the pros- 
pect of a possible barbarian invasion, Captain Mahan thinks 
that the United States will be obliged to play a prominent part 
in the defense, and, to quote his own words, " to cast aside the 
policy of isolation which befitted her infancy, and to recognize 
that, whereas to avoid European entanglement was once essen- 
tial to the development of her individuality, now to take her 
share of the travail of Europe is but to assume an inevitable 
task, an appointed lot in the work of upholding the common 
interests of civilization." He predicts that against this possible 
invasion the only barrier will be the warlike spirit of the repre- 
sentatives of civilization, and adds with patriotic fervor, backed 
by good argument, " Whate'er betide, sea power will play in 
those days the leading part which it has in all history, and the 
United States by her geographical position must be one of the 
frontiers from which, as from a base of operations, the sea power 
of the civilized world will energize." In urging the just recog- 
nition of the superiority of the sea to the land, this able author 
says, " Control of the sea by maritime commerce and naval 
supremacy means predominant influence in the world, because, 
however great the wealth of the land, nothing facilitates the 
necessary exchanges as does the sea." 

If Captain Mahan and other great thinkers and tacticians 
who hold the same or similar opinions are correct, then our 
navy cannot be enlarged too soon nor too extensively. 

It may be asked, How will this accord with the peace theory 
and the holding forth of the olive branch to the nations? It 
will be perfectly consistent with that, as all preparations for 
defense, and defense only, are. Savages and barbarians bent 
on plunder do not understand anything about the significance 
of the olive branch until they are first made to feel the power 
behind it. Then they become docile. It may require such a 
display of strength as Captain Mahan supposes, to reduce these 
nations outside of civilization to a state of mind in which they 



PEACE AND PROSPERITY. 25 1 

will feel disposed to reason, so far as they are capable of rea- 
soning. But in order to accomplish this great purpose, the 
necessity for which may still be far distant, a pacific alliance 
among all civilized nations, irrespective of language, will be an 
indispensable preliminary. Such preparation would certainly 
be the best guaranty for universal peace and prosperity, thus 
enabling the human race to apply its best energies to its own 
development instead of to its degradation and destruction. 



CHAPTER XXXIII. 

THE BARING FAILURE. 

The true story of the cause of that astounding collapse told for the first 
time. — The great Baring boom, and what the scaling down of the 
interest on British consols had to do with it. — The Duke of Marlbor- 
ough's hand in it. — Sensational acts of the hypnotic gentleman who 
captivated the Argentine beauty, and through her captured all the 
Barings' business in the South American republic. — Magnificent execu- 
tive ability displayed by Mr. Lidderdale in the rehabilitation of the 
firm. — Amazing gratitude of the benevolent friend who assisted Lord 
Revelstoke with five million dollars. — The future money center of the 
world. 

THERE have been many versions of the Baring failure 
and its causes, but the true story of the latter is here told 
for the first time. 

The means to obtain the money which caused the big Baring 
boom, first in the securities of Guinness's XX. and afterward in 
the properties, real and imaginary, of Argentina, originated in 
the act of Parliament, a few years ago, which scaled down the 
interest on the British consols from 3 to 2 J per cent., and that 
act of Parliament originated in a casual conversation between 
the Duke of Marlborough and myself. 

When the Duke, who married Mrs. Lily Price Hamersley, 
now Lady Charles Beresford, was in New York, he and I be- 
came quite well acquainted, and had frequent conversations on 
financial questions and other subjects, in all of which I found 
him an exceedingly brilliant talker, thoroughly informed on all 
subjects that came up. 

One evening the conversation was diverted to a comparison 
of the market value of our government bonds with that of the 
British 3 per cents., or " consols " as they are called. These 
securities had been called " consols" by way of abbreviation 

252 



THE BARING FAILURE. 253 

since the time of the Consolidated Act in 1757-, in the reign of 
George II., by which the debts of the nation, including annui- 
ties, were consolidated or brought together into one scheme, 
an average rate of interest being struck at 3 per cent. This 
rate had never been changed, and it was therefore natural for 
the idea to get into the British mind that it was destined to 
be perpetual. 

As these " consols," or the British consolidated fund, are kept 
in account in the Bank of England and virtually form the great 
bulwark of its deposits, the decrease in the rate of interest was 
regarded as an injury to the credit of that mighty financial in- 
stitution, which had been established in 1694 on the first 
national loan of ^1,200,000, to William III. 

I said, " Your Grace, the English consols in comparison with 
our government's ought to be reduced to a lower rate of inter- 
est, as 3 per cent, for such a high grade security is too high, and 
the premium at which our bonds are now selling makes the 
credit of the United States higher than that of Great Britain," 
— for our bonds were then on the basis of 2\ per cent, per 
annum or thereabout. 

Marlborough appreciated the criticism at once, and remarked 
that his government ought to stand on an equal footing with 
that of the United States. He added, " The comparison from 
your point of view, with which I coincide, has never, I think, 
been presented to the British Parliament ; but I will call the 
attention of some of my political friends to the subject as soon 
as I return home." 

The Duke remembered this resolve ; the attention of Parlia- 
ment was called to the subject, and the result was that the in- 
terest on consols was cut down to 2§ per cent, by an act of 
Parliament, with the understanding that there should be a 
further reduction to 2\ per cent. 

When the fact was announced that the rate of these time- 
honored and most reliable securities had been reduced one 
quarter of 1 per cent., the surprise and astonishment of their 
holders in England could hardly have been greater if they 
had been struck by a cyclone \ and if some of them had known 



254 THE WALL STREET POINT OF VIEW. 

that the Duke was at the bottom of it, Blenheim Castle might 
not have been the best place for him to seek repose and 
shelter. 

To the American mind one quarter decline in the interest of 
any security appears of but small account ; but if we take into 
consideration the result to the steady-going life of the average 
Englishman, with his income adjusted to a certain mode of liv- 
ing just so as to make both ends meet, we can easily imagine 
that this decline of one twelfth was sufficient to produce a 
shock. If it deprived him of only one or two luxuries, it was 
yet a hard matter ; but this cutting off of one twelfth of their 
income was to plunge many of them irretrievably into debt. 
Consequently they became desperate, and in the moment of 
their partial frenzy they determined to part with their holdings 
and buy into others that would yield more. 

This was the opportune moment when the Barings resolved 
to put upon the market the Guinness's Stout Corporation secu- 
rities. Guinness's XX. was a commodity known and appreci- 
ated by everybody in Great Britain and her colonies who had 
arrived at the years of discretion, and the shares were known 
to have for their basis one of the best properties in all the Brit- 
ish dominions. Consols were, therefore, rapidly changed into 
cash, and invested in this new and promising security. The 
Barings took in the money with such rapidity, and the accu- 
mulations became so large, that the fiction of Sindbad the Sailor 
in the Valley of Diamonds might have seemed more true than 
the reality. 

While the tide of this wonderful prosperity was still rising 
and threatening to overwhelm all other multi-millionaires, a 
young man with a strong resemblance to Adonis in features, 
and an Apollo Belvedere in form, was roaming through South 
America eking out a precarious existence by selling, for a 
noted New York chemical firm, a new pill warranted to cure 
fever and ague and several other malarial ills to which flesh is 
heir in sultry climes. He was also equipped by the same firm 
with samples of the famous Florida water, which was presumed 
to exercise about the same healing influence externally that the 



THE BARING FAILURE. 255 

pill possessed internally. He was by birth a natural hypnotist, 
improved by art, and had been a pupil of the famous Charcot, 
the French hypnotist, but was not particular about his master's 
advice never to take advantage of his power for selfish purposes. 
This young man had been employed by the firm, and was 
intrusted with the South American mission on account of his 
linguistic abilities and his amazing hypnotic power in convinc- 
ing the people of every tongue and clime that the pill and the 
water were exactly what he represented them to be, only a 
little superior in quality, perhaps, modesty being one of his 
many personal characteristics. 

The wanderings of this disciple of ^Esculapius over the pam- 
pas of South America would afford material for a new Odyssey, 
but I will omit most of his adventures, and confine myself as 
closely as possible to those more immediately connected with 
the Baring failure. He did not meet with any particular siren 
or other enchantress, to my knowledge, until he arrived at 
Buenos Ayres, where he encountered one of nature's loveliest 
daughters, a Venus of the pampas. The hypnotist was bent on 
combining business with pleasure, and lost no time in securing 
his newly found prize against the possibility of recapture by 
leading her to Hymen's altar. He went through the formality 
of politely asking the consent of her father, who was the head 
of the firm of Barings' agency in Argentina, and who at first 
objected to the marriage on such short acquaintance ; but he 
soon surrendered to the irresistible influence of the hero's mag- 
netism, and his new son-in-law became a member of the firm. 

This modern Ulysses, taking Shakespeare's advice, threw his 
pill and Florida water to the dogs, and went into another line 
of business. Like a dutiful son-in-law, he exhibited gratitude 
toward his bride's parent by taking the burden of managing 
the firm off his hands, and through the same hypnotic propen- 
sity became manager of the concern, showing that, like Ulysses 
again, he was " a man of many resources.' ' He visited London 
just at the time the Barings were looking out for new financial 
worlds to conquer, saw Lord Revelstoke, who was then at the 
head of the house, as well as one of the directors in the Bank 



256 THE WALL STREET POINT OF VIEW. 

of England, and pictured to his lordship the new imaginary 
worlds in the Republic of Argentina. 

Revelstoke had some doubts at first as to the magnitude of 
Argentina's wealth, and in order to remove these, he sent an 
agent to Argentina with our hypnotic hero who, like Elijah 
with Elisha, threw a double portion of his persuasive spirit 
upon the agent, sending him back to Revelstoke with a story 
of prospective wealth, compared with which the exaggerated 
accounts first given seemed mild and unassuming. Revelstoke 
no longer hesitated, but began to organize these newly dis- 
covered properties, adding the new securities to those of 
Guinness's XX. 

But Englishmen are proverbially conservative. As soon as 
purchasers became aware of the fact that the properties behind 
the fresh securities were not virtually gold mines and valuable 
concessions in Argentina, but rather castles in Spain, they be- 
gan to realize quickly on all Barings' securities. The result 
can be easily imagined. The Baring riches began to take 
wings. The Barings tried hard to impede their flight, and 
might have done so with the $100,000,000 of Russian gold 
which was still in their vaults ; but the astute Rothschilds, it 
is alleged, or somebody in their interest, informed the Czar of 
the firm's unfortunate situation, and his Imperial Highness of 
Russia ordered that gold transferred from London to the vaults 
of the Rothschilds at Frankfort-on-the-Main, and elsewhere. 

Down went the great house of Baring, as if struck by lightning. 

Now comes the second part of this chapter which describes 
one of the greatest feats in all the history of financiering. It 
was performed by Mr. Lidderdale, Chairman of the Board of 
Governors of the Bank of England, who had been for a con- 
siderable time a resident of New York, representing the great 
mercantile firm of Rathbone and Company of London. By his 
able work at this crisis he averted a panic which, but for his 
timely intervention, would in all probability have been world- 
wide. 

At that time merchant ships on every sea with their precious 
cargoes were relying on the Barings to credit their bills of 



THE BARING FAILURE. 257 

lading. Merchants and business men everywhere were depend- 
ing on the house for credit to tide them over. Then there 
were thousands upon thousands who had Barings' paper, which 
had hitherto been considered as good as gold everywhere. 

When we take a retrospect of these things, we can imagine 
the Herculean task Mr. Lidderdale had undertaken ; viz., to 
stand in the place of the broken-down Barings, to act as sub- 
stitute for them, to answer all immediate claims, and to pay 
all immediate demands until the clouds should roll by and 
the Barings again be put upon their feet. It took seven mil- 
lion pounds sterling, equal to $35,000,000, to essay the mighty 
task, and this he procured from the Bank of England through 
his great influence with the governors of that institution. In 
fact, the majority of the banks and bankers in London also lent 
their aid in the work of rehabilitation. 

Perhaps there was no man in England qualified to attempt 
the gigantic operation except Mr. Lidderdale. Where did he 
learn how to do it? It had never been done in England be- 
fore. There was no attempt in the case of Overend, Gurney and 
Company, in 1866, to ward off the blow by such means. Mr. 
Lidderdale must have learned his modus operandi from his ex- 
perience in the methods of the New York Clearing House, 
particularly its mode of warding off panics by the issue of cer- 
tificates. This famous transaction on his part, therefore, re- 
flects the highest credit upon New York banking management, 
and acknowledges the managers of our united city banks to be 
in the foremost rank of the world's financiers. 

There are certain circumstances connected with the reorgani- 
zation of the house of Barings heretofore known to but few, 
which are of the most interesting character. How the firm 
got so suddenly on its feet again has puzzled many financiers, 
who thought they were very clear-sighted in such matters and 
could see through almost anything in the financial world, no 
matter how dense it might appear to others. 

It was not the Bank of England that did it, though most 
people think it was. That institution carried over only the 
outstanding obligations, though this operation undoubtedly was 
s 



258 THE WALL STREET POINT OF VIEW. 

a great deal for the bank to do, and, as previously stated, it 
averted a panic the extent of which, from the nature of things, 
must have been world-wide. But setting the Barings on their 
feet again, and making them once more conspicuous in the 
eyes of the world and as fully trusted as before, was wholly 
another matter, and cannot be confounded with the operation 
so ably managed by Mr. Lidderdale. 

Some people may infer that it must have taken a powerful 
syndicate to perform this work. I admit that such an inference 
would be quite natural, for the task was a huge one ; and if the 
event had occurred in New York, the chances are that only a 
syndicate with millions at its back would have essayed the 
undertaking. It may therefore seem to the reader that I am 
taxing his credulity too severely when I ask him to believe that 
the reorganization of the Baring Brothers into a limited liability 
company was accomplished by one man. He came forth from 
a well-earned retirement and placed his whole fortune, a million 
pounds sterling, $5,000,000, at the disposal of the Baring 
Brothers. He was simply a relative of the family, but alas ! 
how few are the relatives so unselfish as he proved himself to 
be. In fact, many relatives would, in the circumstances, 
have brought railing accusations against the unfortunate ones 
and played Job's comforters. This man was not of that stamp. 
He was one of nature's noblemen. What a lesson such a man 
teaches to those cold-hearted, grasping misers, who hold fast 
to their wealth even on the brink of the grave. He had made 
a fortune in the old house of the Barings and had retired to 
enjoy it in the evening of life. He was a bachelor, well 
known in financial circles in New York, and had lived here 
several years, being a member of the banking firm of Ward, 
Campbell and Company, 52 Wall Street. 

These are the bare facts, the mere outlines of a financial 
episode of real life in our own times, and I believe it is hardly 
an exaggeration to say that they would afford material to an 
imaginative author, which I make no pretense of being, for the 
production of a most thrilling fiction. 

The great firm of Barings was the result of the growth of a 



THE BARING FAILURE. 259 

hundred years, during which its ramifications extended all over 
the world, but the blooming of this great century plant of com- 
merce in South American fields overtaxed the strength of the 
parent stock, so that it must needs have a period of recupera- 
tion. 

The position occupied by this great house was unique in the 
history of the world. Decade after decade had fostered the 
establishment of the greatest credit ever accorded a private 
firm. Its activities were world-wide. Through this ever in- 
creasing confidence its bills were accepted without question 
and without limit, as equivalent to cash the world over. 

The merchant at Hong Kong, at Yokohama, at Melbourne, 
at Cape Town, or at Rio de Janeiro, who in return for his ship- 
ments received their documents, no matter whether these were 
dated at two months, three months, or six months, had the 
immediate equivalent of cash. Such a credit virtually provided 
an addition of many hundreds of millions to the world's cur- 
rency. 

It may be considered doubtful if such a position will ever 
again be held by any single private concern ; at least, it is not 
likely in our time. Still, it is a source of very great satisfaction 
that the old house has, since its rehabilitation, again advanced 
in popular confidence. 

u You may break, you may shatter the vase if you will, 
But the scent of the roses will hang round it still," 

is peculiarly applicable. The fragrant odor of a great and 
honorable name has not suffered destruction, while the vessel 
has been cemented together. An effect of the tremendous 
shock which their misfortunes caused may be observed in the 
course of the London money market since 1890. Prior to that 
time, for years the maximum interest rate scarcely ever ex- 
ceeded 3 per cent., ruling almost invariably at a much lower 
rate. Since then, however, London discount rates have been 
subject to the wider fluctuations of other money centers. 
Does not this unsettling of stability presage a shifting elsewhere 
of the great money center of the world? 



260 THE WALL STREET POINT OF VIEW. 

And if so, why not to New York? We have here the metrop- 
olis of what is acknowledged the richest country in the world — 
a city rapidly becoming as cosmopolitan as London, financial 
institutions and great business firms which rival those of the 
Old World, and in addition a geographical position at the very 
gateway of this continent which places it, in that respect, beyond 
rivalry. All these factors tend toward the establishment here 
of that necessary foundation of stability which fosters commer- 
cial and financial supremacy. 



CHAPTER XXXIV. 

THE VENEZUELA MESSAGE PANIC. 

This panic one of the most far-reaching and most disastrous in its conse- 
quences. — It was a surprise, and hence its great power for mischief, 
especially at a time when prosperity was just under way. — An utter 
collapse of credit, both foreign and domestic, aggravated by foreign 
holders returning our securities. — The Monroe Doctrine and how Presi- 
dent Cleveland construed it. — Simply an outburst of honest and over 
weening patriotism on his part. — His misapprehensions regarding the 
nature of so-called international law, and what constitutes a casus belli, 
— The President's just cause for offense at Salisbury's hauteur, but still 
the Monroe Doctrine not applicable to the case. — How the message 
and its consequences played into the hands of the free-silver faction and 
helped to make the candidacy of Bryan possible. 

THE Venezuela message panic was probably farther reach- 
ing and really more disastrous than any in recent times, 
primarily for the reason that it was sudden and unexpected. 

The rumblings of the silver panic were distinctly heard in 
the distance ; so with the tariff panic, and also in the case of 
the currency-reform panic. Disaster growing out of the last- 
named was due to the apprehension that State banks were 
going to supplement the national banks with all the horrors of 
wild-cat currency associated with the name of those institutions 
in former years, the great variety and large volume of whose 
notes, together with their numerous and bewildering counter- 
feits, had complicated finances prior to the Civil War. 

But let us examine the circumstances associated with the 
Venezuela message panic more closely. They are of the deep- 
est interest to the people of this country, and show us the stern 
necessity of an Executive acting with the most diplomatic dis- 
cretion where international affairs are involved, and where a rash 
or false move may in an instant let loose the dogs of war and 

261 



262 THE WALL STREET POINT OF VIEW. 

ruin business. It is like playing with fire, when the head of a 
nation touches rudely a point which may be made a casus belli 
by some sensitive people. Happily, Great Britain was not very 
sensitive on the matter in question. 

The candid intention of Mr. Cleveland was a patriotic defense 
of the Monroe Doctrine, but the time and the occasion were 
inappropriate. For several months prior to the date of this 
diplomatic document business had been reviving, and confi- 
dence was being gradually restored. A fresh impetus was 
visible in the channels of trade all over the country, and a gen- 
eral feeling of cheerfulness, which had not been discernible 
since 1893, pervaded the masses. Stocks had gone up very 
considerably, dry goods were selling at a more lively rate, with 
advancing prices from the jobbers to the retail merchants, and 
quite a prosperous business all around had been successfully 
initiated. 

At this juncture news came from Washington, and was duly 
distributed by the news agencies, to the effect that Mr. Cleve- 
land had gone off on another duck-hunting tour. This, too, 
was a reassuring feature of the times, bearing upon the subject 
of prosperity. It was naturally inferred that if the President 
felt at liberty to go off on a tour of recreation, his mind must be 
in a state of agreeable composure so far as public affairs were 
concerned, and that he, too, was enjoying a full share of the 
beneficent influence of the improved condition of business. 

After a few days' absence from Washington, the nation was 
informed, to its great satisfaction, that the President was having 
unprecedented success in his sport and that he seldom missed 
his aim. Then, in an evil hour, he returned to Washington 
and sprung that ill-starred Venezuela message on Congress and 
the civilized world. 

It was December 1 7, 1895, when the blow fell. The effect was 
instantaneous, and the panic spread like wildfire all over the 
Union, and wherever our credit relations in Europe existed the 
same feeling of distrust and dread of coming calamity seized 
the minds of the people at large. There was a wild rush to sell 
everything on the very shortest notice, and to get gold if pos- 



THE VENEZUELA MESSAGE PANIC. 263 

sible, for the dreadful specter of war admonished the people 
that the yellow metal would be their tower of strength in the 
event of hostilities. Credit was broken down to an extent that 
the country had not witnessed since 1873, an d there was scarcely 
a household throughout the length and breadth of the land 
where the baneful effects of this war scare were not felt. In 
fact, the whole country lay prostrate in presence of the phantom 
of " blood and iron" which the people had conjured up from 
the depths of their own fertile imaginations, because there 
was nothing in reality to justify half the excitement which the 
occasion developed. With the exception of the last two para- 
graphs or so, the language of the message was almost as mild 
and inoffensive as the one delivered to Congress by President 
Monroe on December 2, 1823 ; and that message was a model 
of smoothness and politeness, the Monroe Doctrine itself, so 
called, being couched in such harmonious and conciliatory 
language as not to offend the most fastidious taste. 

The whole pith of the Monroe Doctrine is contained in the 
following clear and admirably constructed sentence, — 

"With the existing colonies or dependencies of any of the Euro- 
pean powers we have not interfered and shall not interfere ; but with 
the governments who have declared their independence and main- 
tained it, and whose independence we have on great consideration 
and on just principles acknowledged, we could not view any inter- 
position for the purpose of oppressing them, or controlling in any 
other manner their destiny, by any European power, in any other 
light than as a manifestation of an unfriendly disposition toward the 
United States." 

This is a very long sentence, but at the same time the lan- 
guage is clear and comprehensive. It is smooth, non-com- 
mittal, and diplomatic in every happily chosen word. There 
is a peaceful tone even in its rhythm, and yet when you read 
between the lines you find that beneath the conciliatory and 
peace-loving surface there is something in it which says, " If 
you don't heed this admonition, but intend to bring on the 
armies of your Holy Alliance to recapture Brazil for a worthless 



264 THE WALL STREET POINT OF VIEW. 

king who will cover the Atlantic with fleets of pirates and com- 
mit wholesale murder and robbery, the United States will fight." 
Viewed in this light, the Monroe message was virtually more 
belligerent than the Cleveland message. Yet the words of the 
sentence are so well put together that it is difficult to construe 
it so. 

In reading Mr. Cleveland's message carefully in its entirety, 
one can see where it was quite natural and easy for him to fall 
into the error which provoked the threat in the last three para- 
graphs, and especially in the final one. Mr. Cleveland inferred 
that the very act against which President Monroe mildly admon- 
ished the European powers had been actually committed in 
the Venezuela affair. He labored under the impression that 
the English claim as to the boundary line was simply a pretext 
for extending the English system to this hemisphere in violation 
of the Monroe Doctrine. The following short paragraph explains 
the logic on which Mr. Cleveland leaned for the justification 
of this opinion : — 

" If a European power, by an extension of its boundaries, takes 
possession of the territory of one of our neighboring republics 
against its will and in derogation of its rights, it is difficult to see 
why, to that extent, such European power does not thereby attempt to 
extend its system of government to that portion of this continent 
which is thus taken. This is the precise action which President 
Monroe declared to be i dangerous to our peace and safety,' and it 
can make no difference whether the European system is extended 
by an advance of frontier or otherwise.' 1 

This reasoning appears very plausible from Mr. Cleveland's 
standpoint, but it is not conclusive nor broad enough in its 
scope to take in the whole situation. It seems to overlook 
the fact that the land in dispute had belonged to Great 
Britain by prescriptive right and adverse possession for 
sixty years, whereas twenty years would have been sufficient, 
according to the laws of most countries, to establish permanent 
ownership. Having got this idea fully impressed upon his 
mind, and reasoning on these premises, it is easy to see how he 



THE VENEZUELA MESSAGE PANIC, 265 

arrived at the panic-breeding and hostile conclusion which he 
honestly thought was indispensable to maintain the honor and 
integrity of the nation whose "peace and safety," as the Mon- 
roe Doctrine expresses it, he considered endangered. When 
in connection with this interpretation we consider the some- 
what supercilious and haughty refusal of Lord Salisbury to 
submit the matter to arbitration, it is not so difficult to discern 
the exasperating causes that moved him to treat Salisbury as 
cavalierly as his lordship had treated our President and Mr. 
Olney, the Secretary of State. 

These are certainly extenuating circumstances, panic or no 
panic, for that imprudent part of the message which caused the 
financial upheaval. The following and concluding parts of the 
message are self-explanatory on these points : — 

" The course to be pursued by this government, in view of the 
present condition, does not appear to admit of serious doubt. 
Having labored faithfully for many years to induce Great Britain to 
submit this dispute to impartial arbitration, and having been now 
finally apprised of her refusal to do so, nothing remains but to accept 
the situation, to recognize its plain requirements, and deal with it 
accordingly. Great Britain's present proposition has never thus 
far been regarded as admissible by Venezuela, though any adjust- 
ment of the boundary which that country may deem for her advan- 
tage, and may enter into of her own free will, cannot, of course, be 
objected to by the United States. 

" Assuming, however, that the attitude of Venezuela will remain 
unchanged, the dispute has reached such a stage as to make it now 
incumbent upon the United States to take measures to determine 
with sufficient certainty for its justification what is the true divisional 
line between the Republic of Venezuela and British Guiana. The 
inquiry to that end should of course be conducted carefully and 
judicially, and due weight should be given to all available evidence, 
records, and facts in support of the claims of both parties. 

u In order that such an examination should be prosecuted in a 
thorough and satisfactory manner, I suggest that the Congress make 
an adequate appropriation for the expenses of a commission to be 
appointed by the Executive, who shall make the necessary investiga- 
tion and report upon the matter with the least possible delay. 
When such report is made and accepted it will, in my opinion, be 



266 THE WALL STREET POINT OF VIEW. 

the duty of the United States to resist, by every means in its power, 
as a wilful aggression upon its rights and interests, the appropriation 
by Great Britian of any lands or the exercise of governmental juris- 
diction over any territory which, after investigation, we have deter- 
mined of right belongs to Venezuela. 

"In making these recommendations I am fully alive to the 
responsibility incurred, and keenly realize all the consequences that 
may follow. 

"I am, nevertheless, firm in my conviction that while it is a 
grievous thing to contemplate the two great English-speaking peoples 
of the world as being otherwise than friendly competitors in the 
onward march of civilization, and strenuous and worthy rivals in all the 
arts of peace, there is no calamity which a great nation can invite 
which equals that which follows a supine submission to wrong and 
injustice and the consequent loss of national self-respect and honor, 
beneath which are shielded and defended a people's safety and 
greatness." 

Another error into which Mr. Cleveland incidentally fell, and 
which stimulated him to arrive at the conclusion that a casus 
belli had been committed by Great Britain, is contained in the 
following excerpts from the message : — ■ 

" Practically, the principle for which we contend has peculiar, if 
not exclusive, relation to the United States. It may not have been 
admitted in so many words in the code of international law, but, 
since in international councils every nation is entitled to the rights 
belonging to it, if the enforcement of the Monroe Doctrine is some- 
thing we may justly claim, it has its place in the code of interna- 
tional law as certainly and as securely as if it were specifically 
mentioned ; and when the United States is a suitor before the high 
tribunal that administers international law, the question to be 
determined is whether or not we present claims which the justice of 
that code of law can find to be right and valid. 

"The Monroe Doctrine finds its recognition in those principles of 
international law which are based upon the theory that every nation 
shall have its rights protected and its just claims enforced." 

Unfortunately for these opinions there is no code of inter- 
national law except by a figure of speech highly inflated. 
In a well-regulated world there ought to be such a code, and 



THE VENEZUELA MESSAGE PANIC. 267 

doubtless there will be after the millennium ; but so long as 
the lion and the lamb lie down together, according to present 
custom, with the lamb inside the lion, the prospects for an 
international code are not very bright. 

Nor is the Monroe Doctrine a law either national or inter- 
national. It is simply a policy or another Declaration of 
Independence. Henry Clay tried hard to make it a law, but 
Congress tabled his resolution, and the subject was dropped. 
The Monroe Doctrine, however, is universally respected in the 
sense just stated, and Marshal Bazaine was quick to recognize 
it in the interest of his imperial master, Napoleon III., when 
our troops were sent to the frontiers of Mexico soon after our 
Civil War. The French politely withdrew, and bloodshed was 
thereby prudently avoided. Other cases less conspicuous might 
be quoted , but this will do for an illustration. 

The theory laid down by Mr. Cleveland, that every nation 
shall have its rights protected by international law, is simply a 
cosmopolitan chimera, yet a very beautiful and poetical idea. 
Every nation is obliged to fight its own battles. If the theory 
were true, Cuba would not so long have sustained the struggle 
single-handed against the power of Spain. 

It remains now to state briefly the origin of the Monroe 
Doctrine. England was chiefly responsible for it, as she sug- 
gested the idea through George Canning, her famous statesman 
and diplomatist, then Secretary of State for Foreign Affairs and 
afterward Prime Minister. The Holy Alliance had resolved to 
restore to Ferdinand VII. of Spain his former colonies in South 
America; and England, seeing that that would be a serious 
menace to her shipping interests and her " rule of the waves," 
nipped in the bud the despotic scheme. Canning proposed 
that England should join the United States in the declaration ; 
but Monroe was too shrewd a diplomatist for that, as his French 
training while minister at the Tuileries, together with his per- 
sonal associations with Washington, Jefferson, John Adams, and 
James Madison, had taught him to be very circumspect in 
diplomacy. 

The Holy Alliance, I scarcely need to state, was organized 



268 THE WALL STREET POINT OF VIEW. 

by Russia, Austria, and Prussia shortly after the battle of Wa- 
terloo in 1 815, for the ostensible purpose of pacifying Europe, 
maintaining the purity of religion, — hence "holy," — return- 
ing to the rightful owners some of the plunder of which Na- 
poleon had deprived them, and of being prepared for the 
contingency of another possible Napoleon. Other nations of 
Europe joined it; but England, through Canning, was the first 
to perceive that its real object was conquest and despotic rule. 
She therefore withdrew, taking self-protective action, as has 
been stated. France followed England's example a year or 
two afterward, and the Alliance was broken up a few years later, 
all its ambitious schemes being dissipated ; after which Europe 
became comparatively tranquil for a season. 

The last paragraph or two in which Mr. Cleveland's threat is 
contained, and which caused the panic, are said to have been 
composed as an addendum to the original document as agreed 
upon by Mr. Cleveland and Mr. Olney. Perhaps the idea of 
this unfortunate addition to the message entered the brain of 
Mr. Cleveland while on the duck-shooting expedition. His 
notion seems to have been that if Great Britain got an inch in 
Venezuela she would take an ell, put to rout the existing govern- 
ment, and set up the English system in its place ; and if it had 
been manifest that this was the intention of Great Britain, then 
the Monroe Doctrine would have been applicable in the case, 
as with the French in Mexico. Under such conditions, the 
belligerent language of the President might have been justifi- 
able, but hardly so until all attempts at arbitration had been 
exhausted. There is no evidence, however, that England had 
any intention of conquest ; neither had she committed any 
overt act that the United States could consider " dangerous to 
its peace and safety," which would be necessary to create a 
casus belli, according to another clause in Mr. Monroe's mes- 
sage. Consequently, to say the least, Mr. Cleveland was rather 
precipitate in his patriotic purpose, and his rash and premature 
action cost this country about $2,000,000,000 in the shrinkage 
of all securities and the almost total suppression of credit, or 
more than two thirds of the amount of the national debt at the 



THE VENEZUELA MESSAGE PANIC. 269 

close of the Civil War. Credit paper became of little or no 
value or use, thus contracting the medium with which we do 
most of our business at least 75 per cent. Nothing would 
pass but coin or its convertible equivalent, and so business was 
brought to a general condition of stagnation. As all the nations 
of Europe regarded the concluding part of the message as a 
menace of war which England must regard either by accepting 
or by showing the white feather, business with foreign nations 
was also largely blocked, and all our foreign relations became 
immediately strained. We were almost as much isolated for a 
short time, in a financial sense, as if we had been surrounded 
by a Chinese wall. 

The worst feature of the predicament was that the message 
was popular before the people began to think and reflect upon 
it, and this feeling was further fomented by Congress catching 
the " Jingo" contagion. Speculators and investors were tum- 
bling over one another in their excitement to get rid of their se- 
curities and to obtain gold, no matter at what sacrifice, for the 
purpose of hoarding it in safe-deposit boxes against threatened 
business disaster and the probable upheaval of thrones and 
kingdoms in prospect ; for if war should break out between 
two of the greatest civilized nations in the world, there was no 
knowing where it would end. Money, in consequence of this 
state of affairs, became stringent, and our securities were sold 
by European holders as fast as they could get rid of them, the 
gold meantime flowing from our shores in a steady and rapid 
stream. The United States Treasury reserve of $100,000,000, 
melted away like snow before the noonday sun until it fell to 
$49,000,000, and the faster it decreased the more the panic 
increased, and the tighter grew the money market, so that there 
was scarcely a spot in our whole broad land that the panic did 
not cover. Failures of bankers, brokers, and merchants were 
reported daily and sometimes hourly; there was a tremendous 
run on nearly all the savings banks, and general disorganization 
in the whole financial world seemed imminent. 

Lord Salisbury may have felt like William Pitt at the breaking 
out of the European campaign of his day, when the powers of 



270 THE WALL STREET POINT OF VIEW. 

Europe were beginning to league themselves against Napoleon. 
" Roll up that map of Europe," said Pitt, "it will not be required 
for the next ten years." His words were truly prophetic, and 
the thought of his prophecy being fulfilled, as it was afterward, 
is said to have caused his death. There was no fear of such 
a fatal result, however, in the case of Salisbury. He is not so 
sensitive ; yet the circumstances afford food for very serious 
reflection to the people of the United States, when it is con- 
sidered that Mr. Cleveland's faux pas, made with honest inten- 
tions and but slightly wrong in theory, cost this country nearly 
one half of the aggregate debt incurred by England during her 
fifteen years' war with Napoleon, including the period that she 
assisted the allies with money and munitions of war when she 
was not actually in the field herself. 

This country had never before met such a sudden revolution 
in business. The panic of 1873 had hitherto been considered 
quick and expansive in its action, but it hardly compared with 
that of 1895. This latter reduced business transactions gen- 
erally to a retail basis, a kind of hand-to-mouth operation, 
and on purely cash principles. The strained relations between 
buyer and seller were of a very disagreeable character, making 
commercial transactions quite irritating, and threatening to sap 
the foundations of our prosperous system of trade and com- 
merce. Business was thus pent up within exceedingly narrow 
limits, and profits accordingly must have been reduced to the 
very lowest ebb. All securities, as a matter of course, experi- 
enced a tremendous fall in prices, many of them seeking a lower 
level than in the panic of 1893. That panic was not to be com- 
pared to the Venezuela message panic, because it did not carry 
with it a total annihilation of credits, which the later hobgoblin 
of war did. 

The paralysis in business that ensued, growing out of this 
terrible disaster, was continued without much visible abatement 
up to the time of the Chicago Free Silver Convention, July 9, 
1896. The agony had been endured by the most long-suffering 
people on the face of the earth from December 17, 1895, the 
date of the message. It is not an exaggeration, I think, nor am 



THE VENEZUELA MESSAGE PANIC. 271 

I guilty, I believe, of attaching too much importance to that 
part of the message productive of the panic, when I say that it 
was mainly due to it that a few men, some of them quite ob- 
scure previously and others notorious for their revolutionary 
predilections, were enabled at Chicago to organize the new 
democracy. 



CHAPTER XXXV. 

OUR NATION'S CREDIT. 

Why should this credit, as illustrated in the market value of our bonds, not 
be on as high a plane as the credit of other nations ? — A plea for the 
Sherman Silver Law and how it was instrumental in tiding the financial 
world over the Baring panic. — A brief retrospect of bond issues and 
cognate subjects of national interest. 

REGARDING the credit of our nation there seems to have 
been a great deal of misconception and loose thinking in 
the past. I here reproduce a few points which I published some 
time ago on this and kindred subjects, viewing them from that 
common-sense point of view which everybody — the ordinary 
business man, the farmer, and the mechanic — can understand 
as easily as the professional financier. There may be, however, 
certain college and other financial professors, men who have 
been in the habit of bending and torturing statistics to dovetail 
with preconceived opinions and theories, who will not under- 
stand the subject from my point of view. 

Though I am an uncompromising advocate of the gold stand- 
ard under existing conditions, yet I am not afraid to do justice 
to silver and silver legislation internationally considered, through 
fear that some cranky critic, who looks superficially on financial 
subjects, should charge me with inconsistency. 

The Sherman Silver Law, for instance, served an excellent 
purpose that could probably not have been achieved at the 
time by any other instrumentality, but it was right to repeal an 
objectionable part of it when through altered circumstances 
and the march of events it became really objectionable. 
Whether the time of repeal was exactly opportune or not is a 
point which has afforded scope for controversy, and which I 
have discussed in another chapter and need not therefore 

272 



OUR NATION'S CREDIT. 273 

refer to further • but the law was justifiable in itself and exhib- 
ited great legislative wisdom in its author. 

The highest credit nations of Europe are England and France. 
They have never issued promise-to-pay obligations bearing less 
than 3 per cent, interest, except when England, years ago, 
reduced the rate on a part of her consols to 2§ per cent., 
which was the initial cause of the Baring failure. 

Almost everything that has gone wrong financially on this 
side since that memorable failure of the Barings has been 
charged to the Sherman Silver Law, especially so as to the 
return of our securities and the large shipments of gold. The 
charge is far from being well founded. The Sherman Law cer- 
tainly did not have anything to do with the Barings' disaster, 
and it was that catastrophe which sent our stocks and bonds 
back, for money had to be raised in England by the holders of 
these properties, because they were almost the only ones that 
could find a ready market. The Silver Law did not enter into 
the question ; it was simply a matter of raising money. These 
people had Argentine, Brazilian, Turkish, Spanish, Russian, 
Egyptian, and numerous other securities of like character, but 
they were unsalable, so there was no alternative but to sell 
their American stocks and bonds ■ therefore the gold that 
went to pay for them did not go because of the Sherman Silver 
Law or from the fear of its consequences at that time. No one 
will say that the Sherman Silver Law had anything to do with 
the Panama swindle and scandal, which came so near creating 
a revolution in France. The fear of this caused the French 
people to draw their money from the banking institutions and 
hoard it, the Bank of France being compelled thereby to 
recuperate her gold reserve by buying gold from America and 
drawing vast sums from us in consequence. Who can pos- 
sibly charge that the Sherman Silver Law was the incentive 
to Austria for selling her 4 per cent, bonds, and with the 
proceeds buying our gold at a premium, and in that way 
taking it from us as so much merchandise to be bought by 
weight ? 

Having given the causes as above for our gold shipments, — 

T 



274 THE WALL STREET POINT OF VIEW. 

namely, the natural sequence and after effect of the Baring 
failure panic, the threatened revolution in France growing out 
of the Panama scandal, and last but not least, the Austrian 
scheme for placing that nation on a gold basis, — I unhesitatingly 
assert that these were legitimate and substantial reasons to 
account for the departure of the yellow metal, and not the 
Sherman Law. 

What, then, are the actual facts? When summed up, they 
are these : the Sherman Silver Law, as a matter of fact, did 
excellent service, and without it an immense number of bank- 
ing institutions, railroad companies, and merchants in this 
country would have come to grief; in other words, the credit 
is due to the Sherman Silver Law for not only carrying us 
through trouble, but for helping England, France, and Austria. 
The new money created by the sanction of the 1 890 Silver Law 
made it possible for this country to sustain itself, and at the 
same time to send gold to foreign countries. 

Notwithstanding, however, that the Sherman Silver Law has 
done so much for us as a nation, I am of the opinion that it 
was wise legislation to repeal the purchasing clause of the said 
law, for we have enough of that kind of money in circulation 
now. 

The leading nations have come down to a business basis, 
requiring international action as the remedy for their difficul- 
ties. It has become necessary to utilize their resources 
in the best possible way, and money as a power is now 
recognized as the most potential influence in connection with 
national alliances. Every country has its own products, some 
more or less than others, the surplus or deficit of which is 
destined at no distant day to be regulated by commercial recip- 
rocal treaties. Such interests will be more influential and pow- 
erful in cementing friendships between nations than are armies 
and navies, the change being from one of force to that of 
mutual interests. War methods belong to the past, and after 
present troubles are adjusted, will soon, by common consent, be 
relegated to the rear to make way for offensive and defensive 
reciprocity commercial treaties, which will insure prolonged peace 



OUR NATION'S CREDIT. 275 

and prosperity. The true spirit between nations should be to 
exchange commodities with each other, and not bullets ; and 
not to engage in the endeavor to grab each other's gold by 
its purchase or other sharp methods. There is gold enough 
for all if mutual consideration and forbearance are exercised. 
Mutual confidence and a fair spirit of reciprocity between 
nations will make the world's supply of gold ample to provide 
for all legitimate exchanges, internally and externally, with the 
nations now on the single standard basis \ but not to provide 
for a selfish spirit of hoarding at the same time. To prevent 
the excessive shipments of gold periodically, the five great 
nations — England, France, Germany, Russia, and the United 
States — should adopt an international note currency or a \\ per 
cent, gold bond issue, not to exceed say $500,000,000, each to 
issue $100,000,000, the five nations to be equally responsible 
for the principal and interest by a mutual agreement. These 
obligations, backed by such high credit, would take the place 
of gold exports and imports. Gold would be no better as a 
remittance — as a matter of fact, not nearly as desirable. The 
notes or bonds would be an international currency, and would 
provide a substitute for gold in a settlement of balances be- 
tween nations. It would do away almost altogether with the 
present clumsy method of shipping gold from one country to 
another, and a few weeks afterward bringing it back again, as 
is now the usual practice. It has really come to be a matter 
of dollars and cents with nations, especially with those that are 
overburdened with debt, which includes most of them. These 
increasing burdens must eventually make it imperative to aban- 
don the large standing armies and navies, and to substitute 
commercial treaties. 



CHAPTER XXXVI. 

OUR NATION'S NEW DEPARTURE. 

The influence of our recent victories on the minds and purposes of other 
nations. — Significance of the Czar's note on disarmament. — Was our 
war with Spain justifiable? — The part played by the President and 
Congress in -the war. — The problem of our new possessions. — What 
shall we do with them? 

ON New Year's Day, 1898, it would have been difficult to 
imagine that this country in so short a time could have 
exercised such an immense influence on the financial and polit- 
ical concerns of the world at large as it does to-day. One 
great manifestation of this universal influence is the recent 
Peace Congress at The Hague which met in May, 1899, at the 
request of the Czar of Russia. 

It is evident that the war of the United States with Spain 
forced this movement to manifest itself much sooner than it 
would have done if international affairs had gone forward in the 
old channels. The idea of the United States becoming an 
empire, in power if not in name, has given the nations fresh 
impetus for thought, and has very probably affected some of 
them with feelings of alarm. 

The formation of an empire, anywhere, has always been a dis- 
turbing element to the rest of the world. It was so with that 
of ancient Rome, also with that of Charles V. of Germany, with 
that of Napoleon I. ; and, though the empire of Great Britain 
has been of gradual formation, its extension has been a prolific 
cause of serious unrest to the nations, and especially to Russia. 

In the latter instance the feeling of uneasiness has been 
mutual, and a constant source of irritation to both nations, 
despite the soothing influences of family relations and inter- 
marriages between the two royal houses ; and this feeling and 
those strained relations have been particularly emphasized since 

276 



OUR NATION'S NEW DEPARTURE. 277 

her Majesty, Queen Victoria, assumed the title of Empress of 
India. 

Now that an alliance between the United States, Russia's 
best friend, and Great Britain, Russia's greatest possible enemy, 
has been suggested, and considering the evidence that the 
United States has recently given to the world of its great pos- 
sibilities in the way of martial development and power on 
both sea and land, it is not to be wondered at that Russia, 
whose statesmen and diplomatists are the most subtle and far- 
seeing in the world, should advise the wisest course in diplomacy 
to avert unhappy collisions between any of the civilized nations 
in the future. 

Europe may laugh at the Utopian idea of young Nicholas ; 
but he is, in all likelihood, only the mouthpiece for the expres- 
sion of the concentrated wisdom of his advisers. The idea of the 
happy and prosperous state of things that would ensue were 
the Czar's suggestion put into practice, is so overwhelming in 
the vastness of its conception and the multitude of its blessings 
to humanity, that minds accustomed to think of nations in arms 
can hardly grasp the nature of the proposed change. 

Let us try to conceive of a burden of $1,000,000,000 taxa- 
tion being at once lifted from the shoulders of 350,000,000 
of people, and at the same time 5,000,000 of the flower of 
these people turned to the arts of peace and profitable pro- 
duction, instead of living on the production of those less 
eligible for toil, and that simply for the purpose of being in 
constant training to kill their fellow-men with the greatest 
possible rapidity. 

The theory that the statesmen of Russia are opposed to the 
views of the Czar does not appear to me to be tenable. The 
late Count Maravieff and some of his colleagues may have only 
acted that part for the sake of effect, pursuant to some secret 
purpose. 

The formerly avowed policy of France on the question 
of Alsace-Lorraine was of a very narrow character, although 
natural ; but the outcome of this conference has already given 
breadth to her national views, as well as to those of other 



278 THE WALL STREET POINT OF VIEW. 

nations. It must be remembered that the provinces about 
which France felt so patriotically sore were wrested by her 
from Germany less than two centuries ago. 

The conference would have been foredoomed to failure, if 
the settlement of boundary lines had been a preliminary part 
of the programme, — a principle that was well illustrated at 
the Congress of Vienna in 181 5. At that time the represent- 
atives of the nations of Europe had just succeeded in getting 
into a complete muddle on the boundary question, when they 
were suddenly relieved by the escape of Napoleon from Elba, 
which upset all their plans and calculations and postponed 
this question indefinitely. If there is any hope for the Czar's 
plan for a paradise on earth, present boundaries must be held 
sacred. Any boundary line settlement that could possibly be 
proposed would leave international affairs in as bad a condition 
as that in which they now stand, and would entail a series of 
settlements running back to the days of Julius Caesar, and then 
even there would arise a new starting-point, calling for the 
redress of older grievances back to the Creation, perhaps, or at 
least as far as the Deluge. 

It may be of national interest in contemplating this mag- 
nificent reform, or rather peaceful revolution of the nations, to 
take a retrospect of the contribution of our own country to the 
proposed change ; but before discussing this matter it is proper 
to place before the mind of the reader the exact utterance of 
the Czar. 

The press at first jumped to the conclusion that he actually 
proposed disarmament, though his words were only suggestive 
of it. He simply suggested that the powers of the world should 
have a conference on the subject of reducing armaments and 
lessening their expenses. The full text of the note was as fol- 
lows : — 

"St. Petersburg, August 24, 1898. 
By Count Maravieff, as Foreign Minister : 

" The maintenance of general peace and the possible reduction of 
the excessive armaments which weigh upon all nations present them- 
selves in existing conditions to the whole world as an ideal toward 



OUR NATION'S NEW DEPARTURE. 279 

which the endeavors of all governments should be directed. The 
humanitarian and magnanimous ideas of His Majesty the Emperor, 
my august master, have been won over to this view in the convic- 
tion that this lofty aim is in conformity with the most essential 
interests and legitimate views of all the powers ; and the imperial 
government thinks the present moment would be very favorable to 
seeking the means. 

" International discussion is the most effectual means of insuring 
all peoples benefit — a real, durable peace, above all, putting an end 
to the progressive development of the present armaments. 

"In the course of the last twenty years the longing for general 
appeasement has grown especially pronounced in the consciences of 
civilized nations ; and the preservation of peace has been put for- 
ward as an object of international policy. It is in its name that great 
States have concluded between themselves powerful alliances. 

" It is the better to guarantee peace that they have developed in 
proportions hitherto unprecedented their military forces, and still 
continue to increase them, without shrinking from any sacrifices. 

" Nevertheless, all these efforts have not yet been able to bring 
about the beneficent result desired — pacification. 

" The financial charges following the upward march strike at the 
very root of public prosperity. The intellectual and physical strength 
of the nation's labor and capital are mostly diverted from their natu- 
ral application and are unproductively consumed. Hundreds of 
millions are devoted to acquiring terrible engines of destruction, 
which, though to-day regarded as the last work of science, are des- 
tined to-morrow to lose all their value in consequence of some fresh 
discovery in the same field. National culture, economic progress, 
and the production of wealth are either paralyzed or checked in 
development. Moreover, in proportion as the armaments of each 
power increase, they less and less fulfill the object the government 
has set before themselves. 

" The economic crisis, due in great part to the system of arma- 
ments ' a routra?iceJ and the continual danger which lies in this 
massing of war material, are transforming the armed peace of our 
days into a crushing burden which the people have more and more 
difficulty in bearing. 

" It appears evident that if this state of things were to be pro- 
longed it would inevitably lead to the very cataclysm it is desired to 
avert, and the horrors whereof make every thinking being shudder in 
advance. 

" To put an end to these incessant armaments and to seek the 



280 THE WALL STREET POINT OF VIEW. 

means of warding off the calamities which are threatening the whole 
world — such is the supreme duty to-day imposed upon all States. 

" Filled with this idea, His Majesty has been pleased to command 
me to propose to all the governments whose representatives are 
accredited to the imperial court the assembling of a conference which 
shall occupy itself with this grave problem. 

" This conference will be, by the help of God, a happy presage 
for the century which is about to open. It would converge into one 
powerful focus the efforts of all States sincerely seeking to make 
the great conception of universal peace triumph over the elements 
of trouble and discord, and it would at the same time cement their 
agreement by a corporate consecration of the principles of equity 
and right whereon rest the security of States and the welfare of 
peoples. " 

In this connection the following table speaks for itself: — 
ARMED POWER OF EUROPE. 

LAND FORCES. 

Peace Footing — 

Austria- 
Germany. France. Italy. Hungary. Russia. England. Turkey. 

Men .... 607,308 559,260 216,235 277,192 1,743,244 220,199 22 8,574 

Horses . . . 108,800 192,200 58,760 67,400 176,600 33, 400 

Guns . . . 2,967 3,480 1,986 2,712 2,672 720 696 

War Footing — 

Men .... 5,166,592 4,849,572 2,181,790 1,767,087 5,008,284 637,863 1,061,862 

Horses . . . 201,200 192,200 55,800 86,740 295,718 90,600 

Guns . . . 4,588 5,024 1,986 2,712 6,084 696 

NAVAL POWER. 

Austria- 
England. France. Russia. Germany. Italy. Hungary. Turkey. 

Armored ships .... 88 49 60 42 25 19 18 

Guns 3,298 1,627 1,343 898 925 488 312 

Cruisers and gunboats . 188 no 37 23 25 18 20 

Guns 3,086 1,547 530 380 547 75 121 

Torpedo boats .... 293 266 230 192 209 87 42 

Men 79>947 80,920 40.532 21,513 21,724 i3,3 I 3 22,276 

Reserves 83,000 84,350 45,000 37,000 19,600 2,000 36,000 

This is a statistical view of the formidable forces which cause 
such a terrible drain on the resources of Europe, and keep the 
greater number of the people in bondage to support it. A 
study of the figures and of the possibilities in expense, human 



OUR NATION'S NEW DEPARTURE. 28 1 

suffering, and slaughter which they imply, is sufficient to appall 
the stoutest heart, whether it beats in the bosom of the proud- 
est autocrat or the most humble laborer. 

Let us return now to the part which our own country has 
played in prompting the note of the Czar, suggesting permanent 
relief from this overwhelmingly oppressive condition. 

In the first place, we have set a noble example to the wqrld 
since our own Civil War by the reduction of our armaments 
to a point that demonstrated our temerity more than our 
prudence, a fact which the late Spanish War clearly showed. 
Though we came out of that struggle victorious, yet, a few years 
prior to the sudden reorganization of our navy, Spain's superior 
fleet might have made it entirely practical for General Weyler 
to have carried out his proud boast of invading this country 
with two hundred thousand men. 

We had a providential escape, coming out triumphant beyond 
precedent in the history of wars, despite the fact that our army 
was overtaken by disease in Cuba, which, on account of our 
hasty and inadequate preparations for war, we were not pre- 
pared to meet until its fatal effects had been severely felt. 

That incompetency should have been displayed in some 
parts of the commissariat and the medical department of an 
army so hastily organized for foreign service as was ours, is 
not to be wondered at. Such accidents are likely to occur in 
the best regulated armies, as with the British, for instance, in 
the Crimea in 1854, when the greater part of Lord Raglan's 
command were starving and half naked for days, while plenty 
of food and clothing was within a few miles of them. A similar 
mishap, only on a much larger scale, occurred to the French 
army in the campaign which ended disastrously at Sedan in 
1870. Errors, either of oversight or by lack of full preparation, 
are seemingly bound to occur in connection with nearly all 
military operations, most especially those which are unduly 
hastened by a rapid march of events. Complaints have been 
numerous during the South African campaign. 

Some persons are inclined to lay the blame for the mistakes 
in our service on President McKinley ; but it was impossible 



282 THE WALL STREET POINT OF VIEW. 

for any man to exercise the superhuman individual foresight 
necessary to detect the incompetency of untried subordinates 
in every department of a rapidly mobilized military service ; 
while his calmness, courage, and promptitude, so far as the con- 
duct of the war itself was concerned, were well-nigh faultless. 

The President counseled peace at any price not inconsistent 
with national honor, and left every possible loophole in his 
power for Spain to escape from the trouble which she had 
brought upon herself, without entailing further disgrace to 
Spanish arms and humiliation to Spanish chivalry ; but Spain 
in her irrational pride ignored all such opportunities, and in- 
terpreted what was meant for her best interests into an insult 
to her historic greatness and invincible valor. Her answer to 
all amicable and soothing propositions was, " No ! we will fight 
to the bitter end." When she did yield for a brief period to 
the appearance of reason and a possible settlement on rational 
principles through the scheme of autonomy, she was not sin- 
cere, but only playing at diplomacy to deceive our people 
and gain time with the hope of European intervention. This 
was fully revealed in the private correspondence of Minister 
de Lome to the editor of the Madrid Herald, which was acci- 
dentally discovered by a Cuban and handed over to our 
government. 

In that correspondence Senor de Lome ridiculed our Con- 
gress and statesmen, and used very disrespectful and abusive 
language concerning President McKinley. He was therefore 
regarded as persona ?ion grata, and before notification to this 
effect could reach his government he prudently resigned. On 
his way home, however, he stopped in Canada with the object 
of concocting mischief against this country, until he was in- 
formed by the government of that country that his presence in 
the Dominion was undesirable. 

About this time, February 15, 1898, was perpetrated that 
horrible crime, the blowing up of the battleship Maine in the 
harbor of Havana, where she was anchored on a friendly visit. 
That tragic event, in which 266 out of a crew of 404 of our 
brave sailors and marines, including two officers, perished, 



OUR NATION'S NEW DEPARTURE. 283 

caused a shock of consternation and horror throughout the 
civilized world. It was then demonstrated to every right- 
thinking mind that patience with Spanish treachery and cruelty 
had ceased to be a virtue, and our eighty millions of united 
people joined with one voice in a cry for retribution. Public 
opinion everywhere pointed to Spanish officials of Cuba as 
the perpetrators of the dastardly deed. A court of inquiry 
consisting of Captain W. T. Sampson, Captain F. E. Chadwick, 
Lieutenant Commander Potter, and Lieutenant Commander 
Marix investigated the matter for six weeks. They found that 
the explosions happened externally, and that there had been no 
carelessness on the part of the crew of the Maine; but the court 
was unable to fix the responsibility. This had no effect, how- 
ever, in removing suspicion from the Spanish officials, and the 
whole country became impatient with the President because 
he did not declare war against Spain at once. 

The destruction of the Maine was undoubtedly the crown- 
ing crime which precipitated the war, though the cause was 
diplomatically and officially attributed to the cruel domination 
of Spain in Cuba and her refusal to relinquish the island. 
That the war was justifiable on account of Spain's misrule in 
Cuba, most of the nations of Europe admit. It is not difficult, 
however, to produce positive evidence in order that the justice 
of Uncle Sam's intervention may be made clear to all men. 

I shall pass over the details of the case of the Virginius, in 
187 1, in which Spain's officials in Cuba defiantly shot down 
more than thirty American citizens. No punishment was in- 
flicted by Spain on these colonial assassins, and we had no 
modern navy then. 

Every attempt at autonomy in Cuba during the succeeding 
years, up to 1896, was a failure and generally a farce. In the 
last of the several wars waged for Cuban independence, Cap- 
tain General Campos, one of the most humane officials ever 
sent out by Spain, acknowledged that all efforts to reduce the 
Cubans to subjection had failed, and he returned home at the 
beginning of 1896. The chief complaint against him was that 
he was too humane. He wished to adhere as closely as possi- 



284 THE WALL STREET POINT OF VIEW. 

ble to the rules of civilized warfare, and that policy was insuffi- 
cient to subjugate Cuba. 

So Campos was succeeded by a man who had gained a 
bad preeminence for human butchery and nameless cruelties 
among the semi-civilized and savage population of the Philip- 
pine Islands, from whom he had also replenished his own coffers 
to the extent of several million dollars, filched from the natives 
and politicians of those wealthy islands. The name of this 
man is Valeriano Weyler, called by way of distinction " Butcher 
Weyler," a cognomen which his actions in Cuba, to say noth- 
ing of his notorious career in the Philippines, fully justify. 

Weyler conceived one of the most fiendish schemes that has 
probably ever entered into the heart of man, for the purpose 
of putting Cuba fully in the power of Spain. It was nothing 
less than extermination by starvation of half a million of peo- 
ple, most of whom were peaceable and uncomplaining, and who 
were tilling the soil industriously for that portion of its product 
barely sufficient to maintain them, the residue being undoubt- 
edly divided among Weyler and his political colleagues, except 
a small surplus that was sent to Spain. This scheme of whole- 
sale assassination excited universal horror and indignation 
when the nature of it became known ; but prior to that more 
than 100,000 had died in the agonies of hunger and the dis- 
eases caused by starvation. These people were driven into 
the cities and walled in by cordons of soldiers until they found 
relief in death. The total number in the six provinces that 
perished in this way probably exceeded 300,000. The idea 
was to starve the pacificos, in order that the Cuban insurgents 
might no longer be able to obtain food to enable them to con- 
tinue the war. Spain herself became so disgusted at this vil- 
lainous mode of warfare, and ashamed at the universal outcry 
against it, that she ordered Weyler home, and then an effort 
was made through General Blanco, who succeeded him, to save 
the remnant of these miserable people, called reconcentrados ; 
but many more perished before relief could reach them, though 
several expeditions were sent from the United States with food, 
money, and medicine. 



OUR NATION'S NEW DEPARTURE. 285 

In this last dire extremity it is worthy of note that those 
truculent volunteers, the Cuban soldiers of Spain, exhibited 
their fiendish spirit in a diabolical manner toward the poor 
pacificos. When these starving people were seeking some 
wood to cook the food which we had sent them, the volunteers 
would not permit them to have the fuel, but told them sneer- 
ingly to let the " Yankee pigs " who sent them the food supply 
them with wood, and shoved the miserable creatures aside with 
their bayonets. 

These cruelties and numerous others were laid before the 
world in their naked deformity by newspaper correspondents, 
chiefly of the United States and Great Britain, and corrobo- 
rated by consuls from each of the six provinces, as well as by 
Consul-general Fitzhugh Lee, and by several of our own con- 
gressmen and senators who visited the island. So the cup of 
Spain's iniquity was full to the brim prior to the Maine horror ; 
and when that occurred both Houses of Congress were so moved 
that they were unanimous in their resolution empowering the 
President to declare war. It was not a case of emotional action 
on the part of either Congress or the President, but the united 
expression of a humane indignation and an intelligent purpose 
resulting from a careful consideration of the facts, that purpose 
having the approval of nearly the whole people of the United 
States and subsequently of the world at large. The people 
urged Congress and Congress urged the President, who, in the 
interest of peace, struggled against the inevitable almost to the 
very point of inciting popular displeasure and distrust. 

The mind of the President was made up on the subject 
shortly after he received the report of the Court of Inquiry, 
and this, together with the consular reports from Cuba, con- 
vinced him that there was but one way of settling the trouble 
between Spain and the people of the island. He sent a mes- 
sage to Congress April n, 1898, in which he stated that armed 
intervention in Cuba by the United States was the only means 
that could be devised, in view of the barbarities practiced on 
the people of the island by Spanish authority. 

Congress immediately drew up a set of joint resolutions stat- 



286 THE WALL STREET POINT OF VIEW. 

ing that Cuba was, and should be, free, demanding that the 
government of Spain relinquish its authority in the island, and 
withdraw its land and naval forces from Cuba and Cuban 
waters, and directing the President of the United States to use 
the land and naval forces of the United States to carry these 
resolutions into effect. 

The President signed these resolutions, April 20, 1898, and 
immediately sent an ultimatum to Spain, quoting the resolutions 
and requesting her to withdraw her army and navy by noon on 
April 23. The Spanish government did not await the ceremony 
of receiving the ultimatum at the hands of Minister Woodford, 
but immediately sent that gentleman his passports without the 
usual Castilian politeness and its dilatory ceremony, thus taking 
the initiative in the declaration of war prior to the time set by 
President McKinley's ultimatum. Minister Woodford notified 
all our consuls in Spain, and immediately set out himself for 
Paris, after handing over his official business to the British 
minister at Madrid. 

President McKinley then issued a proclamation dated April 
22, 1898, in pursuance of the joint resolution of Congress, to 
the effect that a blockade be established and maintained on the 
entire northern coast of Cuba in accordance with the laws of 
the United States and the law of nations applicable to such 
cases. This action was approved by Congress, and a call for 
125,000 volunteers was issued, and immediately responded to 
with enthusiasm from all parts of the country, showing that the 
response for a million men would have been made with as 
great alacrity. 

On the very morning of the day of this last proclamation 
the first gun was fired by our navy, from the Nashville which 
captured the first Spanish prize, the steamship Buena Ventura. 

On April 25, Congress, at the instance of the President, passed 
a bill declaring that " war exists between the United States of 
America and the kingdom of Spain," and moreover that war 
had existed since April 21, the date on which Minister Wood- 
ford received his passports. The bill further provided " That 
the President of the United States be, and he hereby is, directed 



OUR NATION'S NEW DEPARTURE. 287 

and empowered to use the entire land and naval forces of the 
United States, and to call into the actual service of the United 
States the militia of the several states to such an extent as may 
be necessary to carry this act into effect." 

From these considerations it would seem that if ever there 
was a justifiable cause for war, our recent troubles with Spain 
most assuredly come under that head. 

The war had virtually begun as above described, but thus far 
it was slow until that memorable May morning in Manila Bay 
when the greatest surprise and the most wonderful victory in 
the history of naval warfare took place : the quick and com- 
plete destruction of the Spanish squadron of eleven ships 
under the command of Admiral Montojos, by Commodore 
Dewey's squadron, without the loss of a single American life 
or ship. 

This sketch of events leading to the recent war is intended 
simply as a retrospect of the great work accomplished in so 
short a time, with the view of obtaining a more correct appre- 
ciation of the destiny of the United States consequent upon its 
new departure. Never were 114 days filled with events 
more momentous in their consequence ; not even the famous 
" one hundred days " beginning with the flight of Napoleon 
from Elba and ending with Waterloo. The destruction of 
Cervera's fleet off Santiago was Spain's Waterloo. 

Some persons are anxious to know how we are to manage the 
new possessions and discharge the new obligations forced upon 
us. Those who can conquer territories usually know how to 
govern them, though Spain has proved a glaring exception to 
this rule. 

The best opinion that I have seen on the subject emanated 
from a Spanish source before the treaty of peace was signed, 
and is contained in the following article : — 

"Those who say that colonies are nothing but encumbrances, 
and that the loss of Cuba and Puerto Rico will prove beneficial to 
our trade and to our merchant navy ; those who believe that distant 
territories merely serve for having our banner there, and as an out- 
let for the refuse of our political parties, are now deeply concerned 



288 THE WALL STREET POINT OF VIEW. 

over which it would be best for us to retain, if possible, Puerto Rico 
or the Philippines. 

" Neither the one nor the others. 

" It is true that Puerto Rico, in due honor to the lamb on her 
shield, has always remained loyal to Spain, but Puerto Rican fealty 
is not much to be relied upon since the day when Senor Moret took 
there the spirit of discord. As to the Philippines, the magnitude 
of the affair is evident to all. An army of from 50,000 to 60,000 
men and ample political reforms would be indispensable to conquer 
the island of Luzon. Have we got the means to go into this colos- 
sal undertaking? Do we feel inclined to face it? One of the morn- 
ing newspapers says that friends of the government have expressed 
the opinion that the sending of these reinforcements would be very 
difficult, not to say impossible. 

" It would certainly be difficult ; by no means impossible. But 
before throwing upon Spain the weight of such an enormous under- 
taking, we must seriously consider whether we are ready to reform 
our methods as regards colonization. If so, let us keep the Philip- 
pines, for there are in those islands enough riches to compensate 
for all our losses. If not, let us not insist upon retaining them, 
because they would be an evil rather than a boon to the nation. 

" It would be a great thing for us if somebody were willing to 
take the islands and assume our colonial and war debts. This 
would, perhaps, be the only way to save interests that are now 
imperiled. 

" There is considerable talk concerning these debts. It is said 
that the United States will compel us to pay them, and that an inter- 
national conflict will thus be provoked. In the first place, the United 
States will not compel us to pay anything, because this : s none of 
their business. They will merely declare that they will not pay or 
recognize them, and that will be all. In the second place, we ought 
to consider that the payment of those debts would have devolved 
upon us even in case autonomy had been a success, and that war 
with the United States had been averted. 

"The Cubans, and also the Spanish residents of Cuba, never 
agreed to pay more than one fifth of the debt. The remaining 
four fifths was to be saddled upon the nation. 

"The Cubans reasoned with perfect logic. 'This debt,' they 
said, -was contracted not in order to build bridges or highways, 
or railroads, but forcibly to oppose our claims. If the justice of 
these claims was fully recognized by the autonomy decree, how are 
we to be compelled to pay the debt ? ' ' 



OUR NATION'S NEW DEPARTURE. 289 

" Thus peace will not cost us more than that fifth part of the debt 
which the Cuban autonomists had consented to pay, and which the 
United States are now said to reject. 

"We refuse to consider the possibility that the debt question 
may give rise to an international conflict in our favor. The Cuban 
and Philippine debts are guaranteed by Spain's Treasury, and all 
that the foreign holders of said debts have to do is to come to us 
in order to be paid, when the Cubans refuse to pay them. 

" Let us accustom ourselves to see things as they really are, for 
our habit of fancying about them has cost us too dear." 

Although there is a great variety of opinion regarding our 
duty and obligations in the matter of the Philippines, the con- 
census of the best opinions seems to be that we have virtually 
assumed obligations of which we cannot honorably divest our- 
selves, and that we are responsible for giving the islanders a 
settled form of government. 

To have handed the government of these islands back to 
Spain was, from either a humanitarian or political point of 
view, not to be thought of \ while according to the opinions 
of eminent European statesmen, to have turned them over to 
a European power for cash considerations would much resem- 
ble selling them into slavery, and at the same time furnish the 
possible cause of a European war over the direction of what we 
had been frightened out of accepting by the bugaboo of impe- 
rialism, so-called. We are not, and will not become, an impe- 
rialistic nation. The idea of democracy is too firmly intrenched 
in the minds of the people ever to allow a departure from the 
Constitution. But we are expansionists, in the very best sense 
of that word. The name of the Great Republic is synonymous 
with the expansion of learning, commerce, wealth, and all else 
that make for the betterment of the human race. 

Under the new responsibilities that have devolved upon us, 
through the acquisition of the Philippines, public opinion is 
steadied, with a tendency toward the relegation of partisan 
prejudices to the rear. The aims and intentions of the govern- 
ment in regard to these islands, so wisely set forth by President 
McKinley, leave no just cause for cavil. 
u 



290 THE WALL STREET POINT OF VIEW. 

Through the unforeseen results of war,' the task of conferring 
the benefits of civilization upon several millions of human 
beings is laid, perhaps most fittingly, upon the most progressive 
nation. We shall not shrink from it, but, as a preliminary, 
order must prevail. 

Beyond this aspect, the strategic value of our new posses- 
sions is very great. They form the natural outer bulwarks of 
defense, and are powerful for the maintenance of the dignity 
of our position among the nations of the earth. From a com- 
mercial point of view, these islands are vastly important. As 
New York is the gateway to our continent, so the Philippines 
form the natural gateway to Asia, with its 800,000,000 of peo- 
ple. They are commercially strategic for warehousing purposes. 

Recent events have clearly demonstrated the insecurity of 
the warehousing of materials upon the mainland of China, 
where they are at the mercy of irresponsible mobs. But our 
merchants are enabled to store their surplus upon these islands, 
free from the dangers of revolution or pillaging, and ready at a 
moment's notice to be sent forward to supply the enormous 
demands of these myriads of Asiatics. The immense advan- 
tages of our position in this most important regard, together 
with our freedom from territorial entanglement upon the conti- 
nent itself, place in our hands a commercial power hard to 
overestimate. 



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